Market News
Canadian dollar extends quarterly decline as economy stalls - REUTERS
- Canadian dollar weakens 0.6% against the greenback
- Touches its weakest level since Sept. 13 at 1.3576
- Domestic economy stalls in July
- Canadian bond yields ease across curve
TORONTO, Sept 29 (Reuters) - The Canadian dollar weakened to a two-week low against its U.S. counterpart on Friday, adding to its quarterly decline, as domestic GDP data supported the view that the Bank of Canada is finished hiking interest rates.
The loonie was trading 0.6% lower at 1.3570 to the greenback, or 73.69 U.S. cents, after touching its weakest intraday level since Sept. 13 at 1.3576.
For the week, it was also down 0.6%, while it lost 0.5% in September and 2.5% in the third quarter.
"Part of this (move on Friday) was driven by month-end flows so far and also the weak GDP print," said Bipan Rai, global head of FX strategy at CIBC Capital Markets.
The data suggests "that the Bank of Canada is likely at its terminal rate and that the prior rate hikes are doing their job and working towards slowing activity."
Canadian economic growth ground to a halt in July as the manufacturing sector posted its biggest decline in more than two years, while a preliminary estimate showed GDP edging up 0.1% in August.
Money markets see a 26% chance of a rate hike at the BoC's next policy decision on Oct. 26, down from 31% before the data.
"You do have the ramifications of a stronger (U.S.) dollar against most other currencies as well. It does feel like the U.S. is better equipped to deal with this higher-for-longer message that we are seeing play out in the markets," Rai said.
The U.S. dollar (.DXY) clawed back its earlier decline to stay near a 10-month high against a basket of major currencies, while the price of oil , one of Canada's major exports, was 1% lower at $90.79 a barrel.
Canadian government bond yields fell across the curve, with the 10-year down 4.1 basis points at 4.032%.
Reporting by Fergal Smith; Editing by Paul Simao
