Canadian dollar weakens to seven-week low as oil falls

Fri Sep 16, 2016 5:14pm EDT
 
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar weakened to set a seven-week low against its U.S. counterpart on Friday as oil fell, while hotter-than-expected U.S. inflation and recent tightening of the U.S. presidential election race supported the greenback.

U.S. crude oil futures settled 88 cents lower at $43.03 a barrel as swelling Iranian exports reinforced fears of a global glut. [O/R]

The U.S. dollar .DXY rose against a basket of major currencies as U.S. consumer prices increased more than expected in August, pointing to a steady build-up of inflation that could allow the Federal Reserve to raise interest rates this year.

Increased probability that Republican candidate Donald Trump will win the U.S. presidential election added to support for the greenback, said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

Trump has proposed a discounted 10 percent levy for businesses that bring back profits held overseas.

The repatriation proposal "would bring a wall of money back into the U.S. from abroad in 2017," Anderson said, adding that a Republican-appointed Federal Open Market Committee would probably be more hawkish than a Democratic appointed FOMC.

Canadian manufacturing sales edged up 0.1 percent in July from June. The gain was well below the 1 percent rise forecast by analysts in a Reuters poll.

The Canadian dollar CAD=D4 closed at C$1.3214 to the greenback, or 75.68 U.S. cents, weaker than Thursday's close of C$1.3160, or 75.99 U.S. cents.   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