C$ weakens as evidence mounts of slower growth

Fri May 20, 2016 10:22am EDT
 
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday after weaker-than-expected retail sales data added to evidence that the economy slowed heading into the second quarter.

Canadian retail sales fell 1 percent in March, exceeding economists' forecasts for a decrease of 0.6 percent, as consumers bought fewer cars, while separate data from Statistics Canada showed that core inflation rose to 2.2 percent. {nL2N18H0FT]

The mixed data leaves the Bank of Canada on hold next week, keeping a watch on the wildfire in Alberta, said David Watt, chief economist at HSBC Bank Canada, who expects the central bank to ease before year end as lack of momentum in the economy becomes more evident.

Economists say second-quarter growth may slow to a standstill, impacted by a wildfire that has cut production in Alberta's oil sands.

Firefighters battling a massive blaze in Canada's energy heartland could see a second day of rainfall and winds, expected to beat flames back from key oil sands facilities, as a producer announced a restart in operations.

Canadian Prime Minister Justin Trudeau suggested on Thursday that a C$30 billion budget deficit was not a hard limit as the government's focus should be on spurring economic growth.

At 9:56 a.m. EDT (1356 GMT), the Canadian dollar CAD=D4 was trading at C$1.3125 to the greenback, or 76.19 U.S. cents, slightly weaker than Thursday's close of C$1.3105, or 76.31 U.S. cents.

The currency's strongest level of the session was C$1.3077, while its weakest was C$1.3133. On Thursday, the loonie touched its weakest in nearly six weeks of C$1.3155.   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