The Canadian dollar weakened to a two-week low against its U.S. counterpart on Tuesday as investors worried about the global growth outlook and weaker-than-expected data added to evidence that Canada’s economy slowed at the end of 2018.
Canadian factory sales decreased by 1.4 per cent in November from October on lower petroleum and coal product sales, while November wholesale trade was down 1.0 per cent, Statistics Canada said.
The data supported the Bank of Canada’s gloomy short-term forecasts for the economy which have sidelined prospects of further interest rate hikes over the coming months.
The central bank has said that low oil prices, which have led to production cuts in Alberta, and a weak housing market would harm the economy in the fourth quarter of 2018 and the first quarter of this year.
“I really think that Canadian data have peaked and I think going forward the story is going to get worse and worse,” said Christian Lawrence, senior market strategist at Rabobank.
Canada’s retail sales report for November is due on Wednesday which will help economists finalize forecasts for monthly GDP.
At 3:37 p.m., the Canadian dollar was trading 0.4 per cent lower at 1.3352 to the greenback, or 74.90 U.S. cents. The currency touched its weakest intraday level since Jan. 7 at 1.3355.
The decline for the loonie came as stocks and the price of oil, one of Canada’s major exports, were pressured by fears of a slowdown in the global economy. U.S. crude oil futures settled 2.3 per cent lower at $52.57 a barrel.
The Financial Times reported the Trump administration rejected an offer from China for preparatory talks ahead of next week’s high-level trade negotiations.
“Any sign that global trade will slow is going to have a more meaningful impact on Canada than the U.S.,” Lawrence said.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 9 cents to yield 1.893 per cent and the 10-year climbed 43 cents to yield 1.967 per cent.
On Friday, the 10-year yield touched its highest intraday in one month at 2.049 per cent.