C$ weakens as trade picture darkens; euro jumps
TORONTO/OTTAWA (Reuters) - The Canadian dollar weakened against the greenback on Wednesday, weighed by more disappointing economic data, this time a larger-than-expected Canadian trade deficit in April.
Currency markets were dominated by euro-centric trading, however, as the common currency rose anew after the European Central Bank kept monetary policy steady. The Canadian dollar fell to a three-month low against the euro EURCAD=R.
On the economic front, Canada reported a near-record trade deficit in April, with imports and exports falling alike. In contrast, the U.S. trade gap shrank by the largest amount since early 2009.
Data last week showed the Canadian economy contracted in the first quarter. Although Bank of Canada Governor Stephen Poloz said he expects a pick up in non-energy exports to help the economy regain momentum, Wednesday's data showed that segment disappointed in April.
"We haven't seen that recovery in non-energy exports like Poloz and the Bank of Canada would like," said Scott Smith, senior market analyst at Cambridge Global Payments in Calgary.
The Canadian dollar CAD=D4 ended the North American session at C$1.2453 to the greenback, or 80.30 U.S. cents, weaker than the Bank of Canada's official close of C$1.2408, or 80.59 U.S. cents, on Tuesday.
The next catalyst may come on Friday, when both Canada and the United States report employment data for May. The U.S. figures could garner more attention as markets try to gauge when the Federal Reserve will begin raising interest rates.
"Many in the market think we're just one really strong non-farm job print away from certainty around July or at the latest September for a (U.S.) rate hike," said Brad Schruder, director of foreign exchange sales at BMO Capital Markets.
Higher interest rates in the United States are expected to lift the U.S. dollar to the detriment of the loonie. Continued...