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The Canadian dollar weakened to a two-month low against the greenback on Wednesday ahead of a speech by a Bank of Canada official that could address the economic threat of China’s coronavirus outbreak, while domestic data showed higher exports.

Canada posted a smaller-than-expected trade deficit of $370 million in December as the value of exports increased 1.9 per cent, led by crude oil.

The rise in exports, which follows data on Friday showing surprise growth in Canada’s economy in November, could temper concern at the Bank of Canada about a recent slowdown in the domestic economy. Last month, Bank of Canada Governor Stephen Poloz said the door was open to an interest rate cut should the slowdown persist.

“The economy may have been on a slightly better footing around the turn of the year than had been feared,” said Ryan Brecht, a senior economist at Action Economics.

Bank of Canada Senior Deputy Governor Carolyn Wilkins, seen by some market players as a leading candidate to replace Poloz when he steps down in June, is due to speak this afternoon on central banking in a slow-growth world. The central bank will release her prepared remarks at 12:15 ET.

At 9:56 a.m., the Canadian dollar was trading 0.1 per cent lower at 1.3294 to the greenback, or 75.22 U.S. cents. The currency, which has fallen 2.3 per cent since the start of the year, touched its weakest intraday level since Dec. 3 at 1.3304.

The decline for the loonie on Wednesday came despite reports of a treatment to fight the coronavirus that helped boost stocks globally and the price of oil, one of Canada’s major exports. U.S. crude oil futures were up 3 per cent at $51.10 a barrel.

The Canadian dollar will climb over the coming year, recouping much of its recent decline, as the economic threat from the virus outbreak in China likely fades, and some analysts do not expect the Bank of Canada to cut interest rates in 2020, a Reuters poll of analysts showed.

Canadian government bond yields were higher across a steeper yield curve in sympathy with U.S. Treasuries. The 10-year yield, which on Monday hit a near four-month low at 1.252 per cent, was up 4.5 basis points at 1.378 per cent.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 29/03/24 5:23am EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
-0.08%0.73791

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