C$ steadies, after hitting 1-month low on US data

Parvez Jabri July 27, 2019

TORONTO: The Canadian dollar was little changed against its US counterpart on Friday, recovering from an earlier one-month low which it hit after better-than-expected US data and the ruling out of currency intervention by a top White House adviser.

The Trump administration has “ruled out” intervening in markets to lower the US dollar’s value, even though President Donald Trump is concerned other countries are weakening their currencies to gain a trade advantage, White House economic adviser Larry Kudlow told CNBC.

“Larry Kudlow gave his interview and said that the US would not intervene to weaken the dollar, and as a result the dollar index just took off, and dollar-Canada went along with it.” said Greg Anderson, global head of foreign exchange strategy at BMO capital markets in New York.

The US dollar was also boosted by data showing the US economy expanded at a 2.1% annualized rate in the second quarter.

Still, the data did not alter the view that the US Federal Reserve would soon lower interest rates for the first time in a decade.

At 3:56 p.m. (1956 GMT), the Canadian dollar was trading nearly unchanged at 1.3168 to the greenback, or 75.94 US cents. The currency touched its lowest intraday level since June 25 at 1.3199.

For the week the loonie was down 0.8%, the second straight week it declined.

Meanwhile, the price of oil, one of Canada’s major exports, was boosted by upbeat US economic data and concerns over the safety of oil transport around the Strait of Hormuz. US crude oil futures settled 0.3% up at $56.20 a barrel Canadian government bond prices were mixed across a flatter yield curve, with the two-year down 3 Canadian cents to yield 1.465% and the 10-year rising 3 Canadian cents to yield 1.464%.

The gap between Canada’s 10-year yield and its US equivalent widened by 2.4 basis points to a spread of 63.1 basis points in favor of the US bond, the biggest gap since June 18.

Canada posted a budget deficit of C$1.41 billion in the first two months of the 2019-2020 fiscal year, following a C$3.18 billion surplus posted a year earlier.

Copyright Reuters, 2019

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