C$ weakens to a nearly two-month low as oil falls

Fri Jul 22, 2016 4:54pm EDT
 
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By Fergal Smith

TORONTO (Reuters) - The commodity-linked Canadian dollar fell to a nearly two-month low against its U.S. counterpart on Friday as stronger-than-expected domestic data was offset by lower oil prices.

Oil fell after the fourth weekly rise in the U.S. oil rig count added to worries about a global crude glut. U.S. crude oil futures CLc1 settled 56 cents lower at $44.19 a barrel.

"Today's story is more about the commodity complex and the weakness in its performance dragging the loonie lower," said Scott Smith, senior market analyst at Cambridge Global Payments, who added that "economic data was quite robust out of Canada this morning."

Canadian retail sales rose by 0.2 percent in May from April to hit a record C$44.28 billion, while sales excluding autos jumped 0.9 percent.

Canada's annual inflation rate held at 1.5 percent in June, slightly firmer than analysts had forecast. The core inflation rate which is closely watched by the Bank of Canada, remained at 2.1 percent.

"The surprise is that the core inflation hasn't been weaker than it has, and the longer we stay over 2 percent as the economy does do better then it does bring the Bank of Canada back on the horizon as likely to tighten and not ease," said Richard Gilhooly, head of rates strategy at CIBC Capital Markets.

The Canadian dollar CAD=D4 ended at C$1.3146 to the greenback, or 76.07 U.S. cents, weaker than Thursday's close of C$1.3086, or 76.42 U.S. cents.

The currency's strongest level of the session was C$1.3055, while it touched its weakest since May 24 at C$1.3185.   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