Canadian dollar recovers from 8-month low, still weaker on Trump win

Wed Nov 9, 2016 4:40pm EST
 
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By Fergal Smith and Alastair Sharp

TORONTO (Reuters) - The Canadian dollar pared losses after hitting an eight-month low against its U.S. counterpart on Wednesday as Republican Donald Trump's election to the White House raised fears about the outlook for Canada's trade-intensive economy.

Canada relies heavily on selling goods and services into the much larger U.S. market, and strategists said that if Trump lives up to protectionist campaign talk it could force the Bank of Canada to take more stimulative measures in order to stave off a domestic recession.

"It's hard to see how, beyond Keystone perhaps, how a Trump presidency is positive as far as Canada is concerned," said Jimmy Jean, an economic strategist at Desjardins.

"There's no question we are already in a fragile state and the key engine of growth on which we had been counting to drive us forward, now there is a big question mark around that," he said, referring to the Canadian central bank's long-stated expectation that a recovery in exports will boost overall growth.

The Canadian dollar CAD=D4 ended at C$1.3378 to the greenback, or 74.75 U.S. cents, weaker than Tuesday's close of C$1.3305, or 75.16 U.S. cents.

The currency's strongest level of the session was C$1.3265, while it touched its weakest since March 1 at C$1.3525.

The oil-linked currency recovered alongside crude prices after a sharp morning slide. U.S. crude oil futures CLc1 settled up 29 cents at $45.27 a barrel. [O/R]

The loonie had gained against the U.S. dollar on Tuesday, supported by expectations that Democratic presidential candidate Hillary Clinton was likely to prevail.   Continued...

 
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.     REUTERS/Mark Blinch