TORONTO: The Canadian dollar was little changed against the greenback Thursday but hit a 1-1/2-year low earlier in the session and underperformed other G10 currencies, as investors worried that the slumping price of oil could hurt Canada's economy.
Oil prices hit their lowest in more than a year on worries about oversupply and the outlook for energy demand, as a Federal Reserve interest rate increase the day before knocked stock markets. US crude oil futures settled 4.8 percent lower at $45.88 a barrel.
"We have hit the pain threshold in oil," said Adam Button, chief currency analyst at ForexLive. "Much of the Canadian oil patch goes underwater at these levels, and it is going to mean curtailment in production and investment."
Earlier this month, the Bank of Canada expressed concern about the outlook for Canada's energy sector when it left its benchmark interest rate on hold at 1.75 percent.
The central bank has hiked five times since July 2017. But bets on further tightening from the central bank crumbled after the policy announcement, which was perceived as dovish.
"For the Bank of Canada, the conundrum is that backward-looking data is strong still, while forward-looking indications for markets, (such as) commodity prices, some data are weak," Button said.
Canadian wholesale trade increased by 1.0 percent in October from September, Statistics Canada said. Analysts had forecast a 0.4 percent increase.
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