Canadian dollar hits 10-week low

The Canadian dollar weakened against its US counterpart on Friday, adding to 10-week lows as data showed slower-than-expected growth in the domestic economy and investors braced for planned US tariffs on steel and aluminium. At 4 pm EST (2100 GMT), the Canadian dollar was trading 0.4 percent lower at C$1.2887 to the greenback, or 77.60 US cents. It touched its weakest level since December 19 at C$1.2915.
US President Donald Trump unveiled the tariffs on Thursday but did not make clear whether they would apply to Canada, which is the largest supplier of both steel and aluminium to the United States. "Presuming the sanctions cover Canada, it hurts," said Greg Anderson, global head of foreign exchange strategy in New York. "This is a fluid situation ... there is still some chance that Canada gets exempted."
Trump's threats to unleash a trade war over steel crushed any hopes of substantial progress in talks to rework the North American Free Trade Agreement. Canada sends 75 percent of its goods exports to the United States. A collapse of NAFTA could hurt its economy, which grew by an annualized 1.7 percent in the final quarter of 2017, short of economists' forecasts for 2.0 percent.
"It is just consistent with an economy that is seeing growth converge back to its trend pace," said Andrew Kelvin, senior rates strategist at TD Securities. Still, money markets expect another interest rate hike from the Bank of Canada by July. The central bank raised its benchmark interest rate in January to 1.25 percent, its third hike in six months.
The price of oil, one of Canada's largest exports, rose on Friday, but posted its first weekly fall in three weeks. Speculators cut bullish bets on the Canadian dollar for the third straight week, data from the US Commodity Futures Trading Commission and Reuters calculations showed. As of February 27, net long positions had fallen to 22,220 contracts from 23,127 a week earlier. The 10-year fell 19 Canadian cents to yield 2.201 percent. Intraday, it had touched its lowest since January 17 at 2.155 percent. The gap between Canada's 10-year yield and its US equivalent widened by 4.1 basis points to -66.7 basis points, its widest since June 26.