Canadian dollar falls

The Canadian dollar retreated versus the US dollar on Friday as oil prices gave back some of the previous day's gains, while sluggish equity markets prompted risk-averse investors to embrace the greenback. Canadian bond prices rose alongside US Treasuries, helped by retreating stock markets and a report showing a record drop in US retail sales in October.
The Canadian currency ended the session at C$1.2255 to the US dollar, or 81.60 US cents, down from C$1.2115 to the US dollar, or 82.54 US cents, at Thursday's close. "I think throughout the day trading is in line with the selloff that we've seen on the commodity front as well as equities," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
Crude oil prices fell 2 percent, weakening the appeal of Canada's oil and gas industry, while North American stocks fell sharply - Canada's main index dropped more than 3 percent - giving back most of the previous day's strong gains. The Canadian dollar's weakness came despite government data showing shipments by Canadian manufacturers unexpectedly rose by 0.1 percent in September from August, driven by strong demand in the aerospace industry. Analysts had been expecting a 1.5 percent drop in sales.
Strauss said the Canadian economy's relative strength versus other industrialised nations is having little impact on the currency, which is instead reacting to the gloomy global outlook for resource demand. The currency fell 3 percent versus the greenback during the week, and is down more than 13 percent since the end of September as demand for commodities such as oil, base metals, and potash have continued to fall.
"It's not so much the Canadian economy, but concerns about the global economy, and I think that's capping any significant Canadian dollar rally," Strauss said. "We don't see that concern evaporating in the near future."
The greenback has strengthened during the economic uncertainty as investors have treated it as a safe-haven bid. Strauss said that a meeting of leaders of the G20 major industrial and emerging nations this weekend would be closely watched by market players, but would not likely have much of an immediate impact on financial markets.