The Canadian dollar is trading lower against its US and European counterparts midweek. The loonie has been tumbling on lower crude oil prices and rising US bond yields that analysts fear could impact global growth. It appears that striking a new trilateral trade deal with the US and Mexico only provided short-term relief for the currency.
On Wednesday, the US Energy Information Administration (EIA) boosted its 2018 and 2019 forecasts for West Texas Intermediate (WTI) and Brent crude oil prices. The former is expected to average $68.48 a barrel this year and $69.56 next year; the latter is predicted to be $74.43 in 2018 and $75.06 in 2019. The EIA raised domestic output levels by 0.8% to 10.74 million barrels per day (bpd) this year and 11.76 million bpd in 2019.
Higher forecasts could not give crude futures a boost as November WTI futures plummeted $1.63, or 2.17%, to $73.34 a barrel on the New York Mercantile Exchange; and December Brent futures shed $1.58, or 1.86%, to $83.42 a barrel on Londonâs ICE Futures exchange.
The decline in energy prices occurred even with Hurricane Michael shutting down a considerable portion of US output and Washington sanctions on Iranian exports.
This week, the International Monetary Fund (IMF) provided a two-year economic outlook and slashed world gross domestic product (GDP) for the first time since 2016. A slowdown in global economic expansion could affect the Canadian economy since much of its growth relies on exports, mostly commodities.
Late last month, Ottawa was able to strike a last-minute trade pact with its North American partners called the USMCA. It boosted the loonie to a four-month high, but it has since lost 1.4%.
In economic data, Statistics Canada reported that the value of Canadian building permits jumped by 0.4% in August, up from a 1.5% dip in July.
Investors will now look ahead to the Bank of Canada (BOC)âs next policy meeting on October 24. While it is not a certainty, the market is anticipating that the central bank will raise interest rates, the fourth in 2018.
The US 10-year Treasury note rose 0.017% to 3.223%.
The USD/CAD currency pair rose 0.39% to 1.2998, from an opening of 1.295, at 16:45 GMT on Wednesday. The EUR/CAD climbed 0.83% to 1.5001, from an opening of 1.4876.
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