TORONTO: The Canadian dollar retreated more than a cent against its US counterpart on Friday, touching a three-week low, as tumbling US crude prices overshadowed higher-than-expected third-quarter Canadian growth figures.
US crude prices plunged 10 percent in their biggest one-day drop in over five years following OPEC's decision to keep current production levels unchanged, a move market participants said would leave oil markets oversupplied.
"The market should've been prepared for that actual outcome, but we had that selloff (Thursday) ... Coming in today, it was just a continuation," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets. "The Canadian dollar is lost now in the oil story."
In Canada, strong exports, business investment and consumer spending helped lift the economy by an annualized 2.8 percent in the third quarter, eclipsing the 2.1 percent forecast by the market.
"Certainly this report on its own would provide a lift for the Canadian dollar ... however, the currency has been buffeted in recent days by the weakening in oil prices," said Paul Ferley, assistant chief economist at Royal Bank of Canada.
"Oil prices will probably be the more dominant factor."
The Canadian dollar finished Friday's session at C$1.1440 against the greenback, or 87.41 US cents, sharply weaker than Thursday's close at C$1.1332, or 88.25 US cents. The currency weakened some 1.7 percent against the US dollar for the week.
Next week, investors will be turning their focus to the Bank of Canada's latest monetary policy decision and employment data from both Canada and the United States.
Mikolich said falling oil prices will likely mean the Bank of Canada will remain more dovish, despite the recent economic data.
Canadian government bond prices were higher across the maturity curve, with the two-year rising 16.2 Canadian cents to yield 0.949 percent and the benchmark 10-year climbing 47 Canadian cents to yield 1.846 percent.
Comments
Comments are closed for this article.