TORONTO: The Canadian dollar edged lower against its US counterpart on Friday as long-term borrowing costs rose and domestic data showed wholesale trade rising less than analysts had expected.
The loonie was trading 0.1% lower at 1.3475 to the US dollar, or 74.21 US cents, after trading in a range of 1.3462 to 1.3507. The currency was on track to post its sixth weekly decline in the past seven weeks, also down by 0.1%.
“The Canadian dollar was largely driven by economic data,” said Michael Goshko, senior market analyst at Convera Canada.
“Hotter US producer prices, and stronger consumer confidence drove US Treasury yields higher ... A miss on Canadian wholesale trade for December also hurt the Canadian dollar.”
US producer prices increased more than expected in January, affirming expectations the Federal Reserve will hold off the start of its interest rate-cutting cycle to the middle of the year.
Canada’s economy could particular benefit from lower rates after households borrowed heavily during the pandemic.
Canadian wholesale trade rose 0.3% in December from November, falling short of the 0.8% gain that economists had expected.
The Bank of Canada has said that interest rate hikes have worked to slow the economy but that underlying inflation is still a concern.
Economists expect Canada’s consumer price index report for January, due on Tuesday, to show inflation easing to an annual rate of 3.3% from 3.4% in December.
The price of oil, one of Canada’s major exports, rose for a second straight day, supported by geopolitical tensions. US crude futures were up 0.9% at $78.72 a barrel.
Canadian government bond yields moved higher across the curve, tracking moves in US Treasuries. The 10-year was up 4.1 basis points at 3.585% but holding below the two-and-a-half-month high it touched on Tuesday at 3.695%.
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