February 28, 2019
TORONTO (Reuters) – The Canadian dollar lost ground against its U.S. counterpart on Thursday as domestic data showed a wider current account deficit and after global stocks were pressured after talks between the United States and North Korea ended without a nuclear deal.
Canada’s current account deficit widened to C$15.48 billion in the fourth quarter from a revised C$10.11 billion deficit in the third quarter as a sharp drop in energy prices triggered a higher deficit on trade goods, data from Statistics Canada showed.
The Bank of Canada, which is widely expected to leave its benchmark interest rate on hold at 1.75 percent when it decides on policy next week, said in January that low oil prices harmed the economy in the fourth quarter of 2018 and will continue to do so in the first quarter of this year.
Oil is one of Canada’s major exports.
At 10:09 a.m. EST (1509 GMT), the Canadian dollar was trading 0.3 percent lower at 1.3192 to the greenback, or 75.80 U.S. cents. The currency, which touched on Monday its strongest in nearly three weeks at 1.3113, traded in a range of 1.3143 to 1.3206.
Wall Street’s main indexes opened slightly lower after a U.S.-North Korea summit ended abruptly without a deal, but losses were limited as data showed the American economy slowed less than expected in the fourth quarter.
In contrast, factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis, highlighting deepening cracks in an economy facing weak demand at home and abroad.
Signs that China’s economy is slowing pressured the price of oil. Still, oil clawed back its earlier losses, with U.S. crude oil futures up 0.2 percent at $57.06 a barrel.
Separate data from Statistics Canada showed that producer prices fell by 0.3 percent in January from December on lower prices for energy and petroleum products. Analysts had expected a 0.1 percent increase in industrial prices.
Canada’s fourth-quarter gross domestic product data is due on Friday.
Canadian government bond prices were mixed across the yield curve, with the two-year up 1 Canadian cent to yield 1.769 percent and the 10-year falling 9 Canadian cents to yield 1.925 percent.
(Reporting by Fergal Smith)