Canadian dollar falls to new six-week low

The Canadian dollar tumbled to a new six-week low against the US dollar on Friday, pressured by a fresh 2-1/2-month low for crude oil and broader gains for the greenback despite softer-than-anticipated US retail sales data. "The price action is more or less a reflection on what is going on in crude markets," said Bipan Rai, director of foreign exchange strategy at CIBC World Markets, adding that a close above C$1.3354 to the US dollar would open the door to levels last seen in September, when the currency weakened to an 11-year low.
On the disappointing US retail sales data, Rai said "it wasn't weak enough to really change the market's mind that the Fed is moving next month." The Canadian dollar finished at C$1.3318 to the greenback, or 75.09 US cents, weaker than the Bank of Canada's official close on Thursday of C$1.3282, or 75.29 US cents.
The currency's strongest level of the session was C$1.3267, while its weakest was C$1.3350. US retail sales rose just 0.1 percent in October, below analyst expectations for a 0.3 percent gain. The International Energy Agency added to concerns about oversupply in the oil market, saying in a monthly report that stockpiles are at a record 3 billion barrels.
Comments by Bank of Canada Senior Deputy Governor Carolyn Wilkins were not seen as having moved the market. In a speech in Toronto, she said the current inflation-targeting framework is working well and "the bar for change is high." US crude prices settled at $40.74 a barrel, down 2.4 percent, while Brent crude lost 1.5 percent to $44.52. Canada is a major oil producer and weaker oil prices tend to reduce the country's terms of trade and its economic outlook.
Canadian government bond prices were higher across the maturity curve, supported by the disappointing US data and weakness in crude oil, but also the sell-off in stocks. Canadian government bond prices were higher across the maturity curve, with the two-year price up 7.5 Canadian cents to yield 0.611 percent and the benchmark 10-year rising 43 Canadian cents to yield 1.653 percent. The Canada-US two-year bond spread was -24 basis points, trading 1 basis point wider, while the 10-year spread was little changed at -62.2 basis points.