TORONTO: The Canadian dollar fell against its US counterpart on Friday, sideswiped by retreating oil prices and facing concern that Canadian economic growth data next week could show more weakness.
Brent oil fell below $50 a barrel after spiking higher on Thursday on Saudi-led air attacks in Yemen.
Canada is a major oil producer and its currency had risen on Thursday along with oil prices on news of the air strikes, with market participants concerned over crude supplies in the region. The fall-back in oil prices hit major commodity currencies.
"The CAD was already on the back foot given the influence of lower commodity prices," said Jack Spitz, managing director of foreign exchange at National Bank Financial. "The worst-performing currencies are Canada, Australia and Norway, and that speaks volumes in terms of where the market sentiment is with respect to the commodity block right now."
Investors were also focused on a speech by US Federal Reserve Chair Janet Yellen in San Francisco. She said the central bank is giving "serious consideration" to beginning to reduce its accommodative policy and that a rate hike may be warranted later this year, although a downturn in core inflation or wage growth could force it to hold off.
The Canadian dollar ended the North American session at C$1.2600 to the US dollar, or 79.37 US cents, weaker than Thursday's close of C$1.2471, or 80.19 US cents.
Spitz said market focus was turning to Canadian gross domestic product data for January due out on Tuesday, with the currency at risk of weakening further if the figures are as weak, or weaker, than the expected 0.2 percent decline.
"We'll be looking at monthly GDP growth, and if it is minus in January as expected, ultimately that could play into a weaker Canadian dollar," he said.
Canadian government bond prices were higher across the maturity curve, with the two-year up 11.5 Canadian cents to yield 0.526 percent and the benchmark 10-year rising 59 Canadian cents to yield 1.369 percent.
Comments
Comments are closed for this article.