Canadian Dollar Tumbles After Weak Canadian, Strong U.S. Data
March 6, 2015
By Don Curren
TORONTO–The Canadian dollar is sharply lower Friday morning, battered by unexpectedly weak domestic trade data for January in the wake of lower oil prices, and a robust February jobs report in the U.S.
The U.S. dollar was most recently at C$1.2610, up from C$1.2486 late Thursday, according to data provider CQG.
The U.S. dollar soared to a session high at C$1.2614, its highest level since Feb. 24, from the C$1.2470 area just before the data.
“Today’s data was definitely a double whammy for the Canadian dollar,” said Scott Smith, senior market analyst at Cambridge Global Payments.
Canada’s trade deficit ballooned to 2.35 billion Canadian dollars in January as oil prices tumbled. The deficit was more than twice the expected C$1 billion, and the second largest in records dating to 1925.
The U.S./Canadian dollar pair has been trading in a broad range from roughly C1.2415 to C$1.2800 since late in January.
While it’s still within the range, the upward impetus from today’s double whammy could be a pivot that will send it decisively higher.
“We’ve had a period of range trading and consolidation, and the Loonie was looking for the next catalyst as to which direction it was going to move,” said Cambridge’s Mr. Smith.
He said the strong data in the U.S. tends to highlight expectations the U.S. Federal Reserve will move toward higher interest rates fairly soon, which contrasts, unfavorably for the Canadian dollar, with a Bank of Canada that is seen staying neutral on rates, or possibly even cutting rates again.
Read the full article here: http://www.wsj.com/articles/BT-CO-20150306-705532