TORONTO: The Canadian dollar edged lower against its US counterpart on Friday as domestic data that showed the economy slipping into a surprise technical recession offset the prospect of an imminent deal to extend the ceasefire in the Middle East.
The loonie was trading 0.1 percent lower at 1.3790 per US dollar, or 72.52 US cents, after moving in a range of 1.3771 to 1.3829.
On Thursday, the currency hit a six-week intraday low of 1.3869. For the week, it was up 0.2 percent.
Canadian gross domestic product declined at an annualized rate of 0.1 percent in the first quarter after a downwardly revised contraction of 1 percent in the fourth quarter of last year, as trade uncertainty weighed on business investment. Analysts and the Bank of Canada had forecast first-quarter growth of 1.5 percent.
“The weak GDP read for Canada is a concern and is shifting rate expectations,” said Amo Sahota, a director at Klarity FX in San Francisco. “The July USMCA renegotiation is also fast approaching and clearly weighing on commitment for CAD positioning.”
Investors were pricing in one interest rate hike by the Bank of Canada this year, down from two that were expected before recent cooler-than-expected inflation data.
The United States-Mexico-Canada Agreement, which has shielded much of Canada’s exports from US tariffs, is set for review by a July 1 deadline. US President Donald Trump said he would make a final decision on Friday over a deal with Iran to extend their ceasefire that would need to include opening the Strait of Hormuz and dismantling Tehran’s capacity to make a nuclear weapon. The US dollar extended its weekly decline against a basket of major currencies, while Wall Street’s major indexes added to their recent gains and the price of oil, one of Canada’s major exports, was trading 1.6 percent lower at USD87.50 a barrel.
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