C$ Weakens After Wholesale Trade Data Disappoints
May 20, 2014
By Leah Schnurr
The Canadian dollar weakened against the greenback on Tuesday after data showed an unexpected pullback in domestic wholesale trade in March.
The decline brought the loonie to the key C$1.09 area, and investors will be watching to see if the currency now will break out of its recent trading range.
Wholesale trade declined by 0.4 percent in March, hurt in part by weaker motor vehicle sales. The loonie fell to a session low immediately after the data was released.
A drop in the Australian dollar also weighed on the Canadian dollar, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.
The Australian dollar was hit after a central banker said capital flows into the country are likely to slow. The Reserve Bank of Australia also released minutes from its last meeting thatshowed board members thought the current low interest rate environment would be appropriate for some time.
The loonie often moves alongside the Aussie as both considered commodity-linked currencies.
“It’s almost a trifecta of little things that have piled up overnight and this morning that have led to some notable loonie weakness today,” Smith said.
The Canadian dollar was at C$1.0903 to the greenback, or 91.72 U.S. cents, weaker than Friday’s official close of C$1.0857, or 92.11 U.S. cents. Many market participants were away for Cansda’s Victoria Day holiday on Monday.
More domestic economic releases later in the week, including retail sales and inflation data, could prove to be catalysts that push the loonie lower as it tests the C$1.09 level, Smith
“If we do manage to break through that on some sustained selling pressure, and we see a run of the stops that are in the low C$1.09s, then I think we could get to C$1.0970 pretty
quick,” he said.
“That being said, we’ve tried over the course of the last week and a half to meaningfully break through this level and it’s been fairly well defended.”
Canadian government bond prices were lower across the maturity curve, with the two-year down 1-1/2 Canadian cents to yield 1.047 percent, and the benchmark 10-year down 21 Canadian cents to yield 2.287 percent.
Read the full article at: http://www.reuters.com/article/2014/05/20/markets-canada-dollar-bonds-idUSL1N0O60KU20140520