Canadian dollar pares some losses after hitting a two-week low

Wed Feb 22, 2017 5:12pm EST
 
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar hit a two-week low against its U.S. counterpart on Wednesday, pressured by lower oil prices and a drop in domestic retail sales, but pared some losses after Federal Reserve minutes fell short of a hawkish tone.

Canadian retail sales unexpectedly declined 0.5 percent in December, the biggest drop in nine months, as consumers bought fewer new cars and spent less during the holiday shopping season.

"It's generally soft data," said Andrew Kelvin, senior rates strategist at TD Securities.

It reinforces the view that the Bank of Canada will not be following the Federal Reserve with interest rate hikes, he added.

The chances of a Bank of Canada interest rate hike this year dipped to 28 percent from more than 30 percent before the retail sales report, data from the overnight index swaps market showed. BOCWATCH

U.S. crude CLc1 prices settled 74 cents lower at $53.59 a barrel on expectations of another surge in U.S. inventories.

Oil is one of Canada's major exports.

The greenback .DXY turned lower against a basket of major currencies as investors weighed minutes of the latest Fed monetary policy meeting.   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