The Canadian dollar was little changed against the greenback on Thursday, extending this week’s sideways trading pattern as investors awaited economic data over the coming weeks that could shape expectations for the Bank of Canada interest rate outlook.
At 3:48 p.m., the Canadian dollar was trading nearly unchanged at 1.3042 to the greenback, or 76.68 U.S. cents. The currency, which has moved in a narrow range since hitting a near two-week low last Thursday at 1.3104, traded between 1.3033 and 1.3056.
“We think over the next couple of weeks we’ll definitely be getting a better read on how (Canadian) Q4 GDP shaped up,” said Mazen Issa, senior FX strategist at TD Securities. “Currently our tracking for GDP is pretty abysmal ... tracking at about a 0.5 per cent increase.”
November data for manufacturing, wholesale trade and retail sales is due next week, while the Bank of Canada will make an interest rate decision and update its outlook for the economy.
In October, the central bank projected a 1.3 per cent annualized increase for fourth-quarter gross domestic product.
“The market is still under-appreciating what the BoC response could be” if economic data disappoints, Issa said.
Money markets see chances of a rate cut by April at less than 20 per cent.
Data on Thursday from payroll services provider ADP showed that Canada’s economy added 46,200 jobs in December, the sixth straight month of gains.
The U.S. Senate approved a revamp of the 26-year-old North American Free Trade Agreement that includes tougher rules on labor and automotive content but leaves $1.2 trillion in annual U.S.-Mexico-Canada trade flows largely unchanged.
Canada sends about 75 per cent of its exports to the United States, including oil.
U.S. crude oil futures settled 1.2 per cent higher at $58.52 a barrel as progress on another major trade deal following the Phase 1 U.S.-China accord fed optimism that energy demand will grow in 2020.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The two-year fell 2.5 cents to yield 1.650 per cent and the 10-year was down 19 cents to yield 1.556 per cent.
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