The Canadian dollar weakened to a near two-week low against the greenback on Friday as moves in the bond market and domestic retail sales data pointed to a slowdown in Canada's economy that could forestall further Bank of Canada interest rate hikes.
The gap between Canada's 10-year yield and the yield on the 3-month T-bill turned negative for the first time since August 2007, at about -5 basis points. The US yield curve also inverted. An inverted yield curve threatens productivity and credit growth as it makes it less appealing to invest in long-term projects. It is seen by some investors as a harbinger of recession.
At 4:26 p.m. (2026 GMT), the Canadian dollar was trading 0.4 percent lower at 1.3417 to the greenback, or 74.53 US cents. The currency, which touched its weakest since March 11 at 1.3429, was down 0.6 percent for the week.
The decline for the loonie came as weak factory data from the United States and Europe fueled fears of a global economic downturn, pressuring stocks on Wall Street and the price of oil, one of Canada's major exports.
Canadian government bond prices were higher across the yield curve, with the 10-year rising 57 Canadian cents to yield 1.601 percent. The 10-year yield touched its lowest intraday since June 2017 at 1.584 percent.
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