TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday as oil fell and its economy saw only modest growth after a recent run of losses.
The Canadian economy grew by just 0.1 percent in April from March, Statistics Canada said. It matched analysts’ expectations after two straight months of declines but cleared the way for a sickly second quarter on the back of the devastation caused by major Alberta wildfires.
“It is quite easy to get a 1 to 2 percent contraction in the second quarter,” said Derek Holt, head of capital markets economics at Scotiabank, which would be a much deeper contraction than the Bank of Canada has signaled.
The immediate market flurry over Britain’s vote to pull out of the European Union settled but lower oil prices weighed on the commodity-linked loonie.
U.S. crude CLc1 prices were down 2.31 percent at $48.73 a barrel, pressured by higher Nigerian output and concern about the economic outlook following Brexit.
At 9:58 a.m. EDT (1358 GMT), the Canadian dollar CAD=D4 was trading at C$1.2983 to the greenback, or 77.02 U.S. cents, slightly weaker than Wednesday’s close of C$1.2975, or 77.07 U.S. cents.
The currency’s strongest level of the session was C$1.2915, while its weakest was C$1.2996.
Canada, the United States and Mexico on Wednesday mounted a fierce defense of free trade, vowing to deepen economic ties despite an increasingly acrimonious debate about the value of globalization.
Canadian government bond prices were higher across the maturity curve, with the two-year CA2YT=RR price up 5.8 Canadian cents to yield 0.524 percent and the benchmark 10-year CA10YT=RR rising 37 Canadian cents to yield 1.089 percent.
Canada’s 10-year yield fell 5.8 basis points further below its U.S. counterpart to leave the spread at -40.6 basis points, its largest gap since June 24, as Canadian government bonds outperformed.
Reporting by Fergal Smith; Editing by Bill Trott