January 22, 2019 / 2:58 PM / 10 months ago

CANADA FX DEBT-C$ hits 2-week as data flags potential Nov economic contraction

    * Canadian dollar falls 0.3 percent against the greenback
    * Canadian factory sales fall 1.4 percent in November
    * Canadian wholesale trade falls 1.0 percent in November
    * Canadian bond prices rise across the yield curve

    By Fergal Smith
    TORONTO, Jan 22 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday, pressured by investor
worries about the outlook for the global economy and
weaker-than-expected data that could point to a contraction in
Canada's economy in November.
    Canadian factory sales were down 1.4 percent in November
from October on lower petroleum and coal product sales,
Statistics Canada said. Analysts had forecast a decrease of 0.9
percent.             
    Separate data from Statistics Canada showed that Canadian
wholesale trade decreased by 1.0 percent in November from
October, as weaker sales in the machinery, equipment and
supplies subsector led the decline. Analysts had forecast no
change.             
    "We still need to get retail sales of course but I have
negative 0.1 (percent) penciled in for November GDP," said Ryan
Brecht, a senior economist at Action Economics.
    Canada's retail sales report for November is due on
Wednesday.
    The Bank of Canada expects low oil prices and a weak housing
market to harm the economy in the short term. Money markets
expect the central bank, which has hiked interest rates five
times since July 2017, to leave rates on hold over the coming
months.             
    At 9:38 a.m. (1438 GMT), the Canadian dollar          was
trading 0.3 percent lower at 1.3342 to the greenback, or 74.95
U.S. cents. The currency touched its weakest since Jan. 7 at
1.3354.
    The decline for the loonie came as stocks and the price of
oil were pressured by fears of a slowdown in the global economy.
It follows the International Monetary Fund's warning on Monday
of a darkening outlook.             
    U.S. crude oil futures        fell 2.2 percent to $52.63 a
barrel.    
    Canada exports many commodities, including oil, so its
economy could be hurt if the global economy slows.        
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 5.5 Canadian cents to yield 1.91 percent and the 10-year
            climbed 26 Canadian cents to yield 1.987 percent.
    On Friday, the 10-year yield touched its highest intraday in
one month at 2.049 percent.

 (Reporting by Fergal Smith; Editing by David Gregorio)
  
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