TORONTO: The Canadian dollar weakened to its lowest in nearly three weeks against the greenback on Thursday as oil prices fell and after domestic data showed a drop in factory sales that could crimp estimates for how much the economy grew in the fourth quarter.
At 10:01 a.m. (1501 GMT), the Canadian dollar was trading 0.5 percent lower at 1.3327 to the greenback, or 75.04 US cents. The currency touched its weakest level since Jan. 25 at 1.3331. Canadian factory sales fell by 1.3 percent in December from November on lower petroleum and coal product sales, Statistics Canada said. Analysts had forecast an increase of 0.2 percent.
"Refinery shutdowns in November don't look to have come back online and the challenges only appear to have increased," Royce Mendes, a senior economist at CIBC Capital Markets said in a research comment.
"The surprising fall in factory activity will take Q4 GDP tracking forecasts below one percent ... soft GDP prints to close out last year and begin this one will keep the Bank of Canada on the sidelines for at least the next few months," Mendes said.
The Bank of Canada has projected that growth slowed temporarily in the fourth quarter of 2018 and the first quarter of this year due mainly to lower prices for oil, one of Canada's major exports. Money markets see chances of an interest rate hike this year at less than 20 percent.
US crude oil futures fell 0.8 percent to $53.45 a barrel on Thursday, reducing some of this week's gains, and US stocks edged lower as a sharp drop in US retail sales in December offset investor optimism that the United States and China could resolve their trade dispute.
Canadian government bond prices were higher across the yield curve in sympathy with US Treasuries. The two-year rose 9.5 Canadian cents to yield 1.763 percent and the 10-year climbed 55 Canadian cents to yield 1.870 percent.
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