The Canadian dollar dropped to a seven-month low on Friday, hurt by weaker-than-expected manufacturing data and sagging commodity prices, while strong US data prompted traders to bid up the greenback. Canadian bond prices rose sharply on the manufacturing data, outperforming rising US Treasuries. The Canadian currency finished at C$1.2653 to the US dollar, or 79.03 US cents, just off its daily low, and down substantially from C$1.2514 to the US dollar, or 79.91 US cents, at Thursday's close. Weakness in the auto and aerospace industries dragged Canadian manufacturing shipments down 2.4 percent in March from February, disappointing analysts who had expected a rise of 0.5 percent.
Combined with strong US import prices data, and weakness in gold and oil prices, this helped drag the currency to its lowest level since last October.
"It was the manufacturing number that got the market buying US dollars in conjunction with the overnight flows," said Jack Spitz, chief currency strategist at National Bank of Canada.
The loonie has fallen hard this week versus the greenback, due largely to divergent economic data. On Wednesday, the Canadian dollar sank after Canadian trade figures were weak, while the US trade deficit shrank unexpectedly.
Also hanging over the currency is the government drama in Ottawa, where opposition parties are trying to force an election over a cash-for-favours scandal involving the ruling Liberals, who hold just a minority in Parliament.
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