Loonie languishes against sinking oil and strong US greenback
The Canadian dollar weakened to a nearly two-week low against its U.S. counterpart on Wednesday as oil prices fell and the greenback made broader gains.
The price of oil, one of Canada’s major exports, was weighed down by an expected rise in U.S. crude production and by a rebound in the U.S. dollar from three-year lows hit last week.
U.S. crude prices were down 0.9 per cent at $61.23 a barrel.
According to Reuters, the recent climb in U.S. Treasury yields helped the greenback gain ground against a basket of major currencies ahead of minutes of the Federal Reserve’s most recent policy meeting.
At 9:21 a.m. EST, the Canadian dollar was trading 0.1 per cent lower at $1.2667 to the greenback, or 78.95 U.S. cents.
The currency’s strongest level of the session was $1.2643, while it touched its weakest since February 9 at $1.2683.
Losses for the loonie came after recent data showed a drop in December manufacturing shipments and wholesale trade, which could dent prospects for monthly gross domestic product.
Canada’s retail sales report for December is due on Thursday and the country’s January inflation report is set for Friday.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year price rose 2.5 Canadian cents to yield 1.814 percent and the 10-year climbed 15 Canadian cents to yield 2.305 percent.
The gap between Canada’s two-year yield and its U.S. equivalent widened by 0.9 of a basis point to a spread of -44.4 basis points, its widest since June 14.
Ontario’s Liberals, the ruling party in Canada’s most populous province, introduced legislation on Tuesday that would give officials authority to retaliate against U.S. states that institute “Buy American” procurement policies.
Also on Tuesday, British Columbia moved to crack down on real estate speculators, expanding its foreign buyer tax and introducing a new speculation tax, as part of a wide-ranging strategy to cool housing prices in Canada’s most expensive real estate market.