The Canadian dollar weakened against its US counterpart on Thursday, posting its sharpest decline since early March as oil prices fell and US data confirmed a slowdown in the economy.
The loonie traded 0.8% lower at CA$1.3490 a greenback, or 74.13 US cents, its biggest drop since March 7. Trading was in a range of 1.3364 to 1.3495.
“It appears to be a mix of lower oil prices and a reaction to CPI and initial claims in the US,” said Amo Sahota, San Francisco-based director of Klarity FX.
The number of Americans filing new jobless claims rose last week to its highest level in a year and a half, and producer prices rebounded slightly in April.
The data was found to be in line with forecasts by most economists, who expect a recession by the end of the year. Canada exports about 75% of its products to the United States, including oil.
Oil fell 2.3% as the political row over the US debt ceiling fueled recession fears, while another bust in the region’s banking sector weighed on Wall Street.
At the same time, the US dollar gained ground against a basket of major currencies, helped by losses suffered by sterling despite another rate hike by the Bank of England.
The fall in sterling “triggered demand for dollars that spread to major currencies,” Mr Sahota said.
Canadian government bond yields fell on a flatter curve, following movements in US Treasuries. The 10-year bond yield fell 7.8 basis points to 2.828%. (Reporting by Fergal Smith; Text by Leslie Adler)
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