TORONTO/OTTAWA: The Canadian dollar was little changed against the greenback on Thursday as the benefit from a rally in oil was tempered by worries that economic growth could be weaker than anticipated.
Still, the slight gain was a reprieve after a more than 2 percent drop over the past two sessions as weaker-than-expected trade data released this week has weighed on Canada's growth outlook.
BMO Capital Markets cut its estimate for first-quarter growth to 2.9 percent annualized from 3.3 percent previously, and its projection for second-quarter growth to 1.3 percent from 1.5 percent.
"People got ahead of themselves with how strong the Canadian economic data was and could be throughout the rest of the year," said Rahim Madhavji, president at KnightsbridgeFX.com.
"We're going to see people temper their expectations."
Economists also expect that oil production cuts due to the massive wildfire in the province of Alberta could weigh on May gross domestic product. That could bode poorly for second-quarter growth, which is already expected to cool from the first quarter's relatively strong pace.
The Canadian dollar ended the North American session at C$1.2868 to the greenback, or 77.71 US cents, a tad stronger than Wednesday's close of C$1.2870, or 77.70 US cents.
The higher price of oil had helped the commodity-sensitive currency rise as far as C$1.2787 earlier in the session. US crude prices settled up 54 cents to $44.32 a barrel on Canadian production cuts, though a rise in US stockpiles capped oil's gains.
The loonie is still up more than 12 percent since hitting a 12-year low of C$1.4689 in January. However, analysts expect the currency will not be able to hold on to all of those gains.
Investors were also looking ahead to Friday's employment report, which is forecast to show Canadian job growth stalled in April after an unexpectedly strong gain in March. Still, that is seen pushing the unemployment rate up to 7.2 percent.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 2 Canadian cents to yield 0.568 percent and the benchmark 10-year up 45 Canadian cents to yield 1.356 percent, its lowest since April 20.
Comments
Comments are closed.