TORONTO: The Canadian dollar edged lower against its US counterpart on Friday, as oil gave back some of its recent sharp gains and investors turned attention to an upcoming interest rate decision from the Federal Reserve.
The loonie was trading 0.1 percent lower at 1.4095 per US dollar, or 70.95 US cents, after touching its weakest intraday level since July 14 at 1.4114. For the week, the currency was down 0.5 percent, after two straight weekly gains, as the United States threatened to impose 50 percent tariffs on a wide range of Canadian goods.
On Friday, the US imposed new tariffs of 10 percent and 12.5 percent on goods from 60 trading partners, including the EU and China.
“The loonie should continue to trade off crude, risk conditions, and trade headlines ahead of next week’s Fed decision and May GDP,” strategists at Monex Europe said in a note. Oil is one of Canada’s major exports. It fell 3.8 percent to USD88.72 a barrel but was still set for a hefty weekly gain because of worsening disruptions to energy flows in the Red Sea and fears of further escalation in the US-Israeli war with Iran. Higher energy prices have worsened the inflation outlook globally, contributing to increased expectations the Fed will hike interest rates, potentially as soon as Wednesday.
Speculators raised their bearish bets on the Canadian dollar to the highest level among the major currencies.
Preliminary data showed that Canadian wholesale trade rose 2.7 percent in June from May, largely driven by higher sales in the machinery, equipment and supplies subsector, and factory sales declined 0.1 percent.
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