TORONTO: The Canadian dollar weakened against its US counterpart on Thursday as the greenback rallied against a basket of major currencies and domestic data showed supply shortages weighing on exports.
Canada posted a trade surplus of C$1.9 billion in September as imports fell faster than exports, Statistics Canada said.
Exports were down by 2.3%, largely on lower exports of motor vehicles and parts as a result of shutdowns caused by the shortage of semiconductor chips.
The Canadian employment report for October, due on Friday, can offer further clues about the strength of the domestic economy.
Canadian dollar lags G10 peers as oil prices slide
The US dollar rebounded, recovering after the Federal Reserve announced it would taper its bond-buying program but said it was in no rush to hike borrowing costs.
The Canadian dollar was trading 0.3% lower at 1.2421 to the greenback, or 80.51 US cents, after trading in a range of 1.2377 to 1.2434. On Wednesday, it touched its weakest intraday level in three weeks at 1.2457.
Still, the loonie has been the top-performing G10 currency in 2021, with a gain of 2.5%.
It is expected to strengthen further over the coming 12 months, supported by the Bank of Canada's recent shift to a more hawkish stance and higher oil prices, a Reuters poll showed.
The price of oil, one of Canada's major exports, was lifted on Thursday by expectations that OPEC and its allies will stick to slow output increases despite calls from the United States and large importers for additional supply to cool the market.
US crude prices were up 2.4% at $82.79 a barrel.
Canadian government bond yields were lower across the curve, tracking the move in US Treasuries. The 10-year eased 4.6 basis points to 1.688%, after touching on Monday its highest level since May 2019 at 1.766%.
Comments
Comments are closed for this article.