Skip to main content

The Canadian dollar fell to its lowest in nearly three weeks against the greenback on Thursday, pressured by domestic data showing a surprise drop in factory sales and U.S. data that upset hopes the global economy is stabilizing.

U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

“It seems to be at this point less about what’s going on in the Canadian domestic economy and more a focus on what is going on in the global economy and by that I mean, retail sales today out of the U.S. have raised concerns about the direction of the U.S. economy,” said Tim Alt, a portfolio manager at Aviva Investors.

Canada, which sends about 75 per cent of its exports to the United States, is a major producer of commodities, including oil. So its economy could be hurt by a slowdown in global growth.

Canadian factory sales fell by 1.3 per cent in December from November on lower petroleum and coal product sales, Statistics Canada said. Analysts had forecast an increase of 0.2 per cent.

“The surprising fall in factory activity will take Q4 GDP tracking forecasts below one per cent,” Royce Mendes, a senior economist at CIBC Capital Markets said in a research comment.

“Soft GDP prints to close out last year and begin this one will keep the Bank of Canada on the sidelines for at least the next few months,” Mendes said.

The Bank of Canada has projected that growth slowed temporarily in the fourth quarter of 2018 and the first quarter of this year due mainly to lower oil prices. Money markets see chances of an interest rate hike this year at less than 20 per cent.

U.S. crude oil futures settled nearly one per cent higher on Thursday at $54.41 a barrel. Still, oil has fallen nearly 30 per cent since October.

At 4:09 p.m. (2109 GMT), the Canadian dollar was trading 0.3 per cent lower at 1.3293 to the greenback, or 75.23 U.S. cents. The currency touched its weakest level since Jan. 25 at 1.3340.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 8.5 Canadian cents to yield 1.768 per cent and the 10-year climbed 47 Canadian cents to yield 1.880 per cent.

Report an editorial error

Report a technical issue

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 1:31pm EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
+0.22%0.73869

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe