Canadian dollar at weakest in two weeks as oil slides, trade data mixed

Tue Feb 7, 2017 5:04pm EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar hit its weakest close in more than two weeks against a broadly higher U.S. counterpart on Tuesday, with falling oil prices and concern about some details of a trade surplus report weighing.

The currency also suffered as investors reassessed the prospect of a faster pace to U.S. interest rate hikes after Philadelphia Federal Reserve Bank President Patrick Harker said late on Monday he would be open to raising rates at the central bank's March meeting if growth in jobs and wages continues.

"Even though he is a known hawk, the fact that he came out and communicated his preference for the three-hike path and maintain that March was a live meeting was enough to wake people up," said Eric Theoret, a currency strategist at Scotiabank.

Prices for oil CLc1LCOc1, a major Canadian export, fell more than 1 percent as growing evidence of a revival in U.S. shale production offset lower output by OPEC and other exporters.

The Canadian dollar CAD=D4 settled at C$1.3167 to the greenback, or 75.95 U.S. cents, much weaker than the Bank of Canada's close on Monday of C$1.3087, or 76.41 U.S. cents and its weakest settlement since Jan. 23.

The currency traded as strong as C$1.3076 early in the session before weakening to as much as C$1.3213.

Canada posted a C$923 million trade surplus in December, thanks largely to booming crude oil exports, Statistics Canada said. November's surplus was also revised sharply higher.

But while overall exports rose by 0.8 percent in December, export volumes actually fell by 1.4 percent.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. The Canadian dollar strengthened against the U.S. dollar on Friday after Canadian CPI data showed an increase in core inflation.    REUTERS/Mark Blinch (CANADA - Tags: BUSINESS) - RTR4MOYV