Canadian dollar hits two-week low against stronger greenback

Thu Jan 19, 2017 5:10pm EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar weakened to a two-week low against its U.S. counterpart on Thursday, brushing off firm domestic data a day after the Bank of Canada left the door open to cutting interest rates.

The greenback was stronger against a basket of currencies as solid U.S. labor and housing data backed the case for strong U.S. economic growth.

Canadian manufacturing sales rebounded 1.5 percent in November from October, Statistics Canada said. Analysts polled by Reuters had expected a 1.0 percent rise.

On Wednesday, the Bank of Canada left its policy rate on hold at 0.5 percent. The central bank warned that a rate cut remains on the table, warning there would be "material consequences" if U.S. President-elect Donald Trump enacts protectionist policies.

"The underlying tone from the Bank of Canada was dovish, and while noting that a rate cut remains on the table is not necessarily new it is important from a currency perspective that it was mentioned at the level that the currency was trading at the time," said Mazen Issa, senior foreign exchange strategist at TD Securities in New York.

The loonie, as Canada's currency is colloquially known, was at the strong end of its recent C$1.30 to C$1.36 range before the central bank governor's comments.

It CAD=D4 settled at C$1.3314 to the greenback, or 75.11 U.S. cents, on Thursday, weakening from Wednesday's close of C$1.3259, or 75.42 U.S. cents.

The currency's strongest level of the session was C$1.3253, while it touched its weakest since Jan. 4 at C$1.3353.   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