The Canadian dollar is losing ground against its major currency rivals to kick off the trading week. The loonie is falling on sliding crude oil prices, bearish economic data, and a dovish Bank of Canada (BOC) that is unlikely to raise interest rates for another few months.
Oil retreated from last weekâs intraday high on Monday as concerns pertaining to the US and Chinese economies and sanctions slapped on Venezuela dominated the international market. The Organization for Petroleum Exporting Countries (OPEC) has slashed output levels in an attempt to rebalance the global crude market, which could be achieved due to involuntary decreases in Iran, Libya, and Venezuela.
March West Texas Intermediate (WTI) crude futures slumped $0.86, or 1.56%, to $54.40 per barrel at 17:04 GMT on Monday on the New York Mercantile Exchange.
Oil is one of Canadaâs biggest exports, and the country is dependent on higher energy prices to sustain the economy.
Last week, Statistics Canada reported that the national economy declined in November, suggesting that fourth-quarter growth slowed. It is anticipated that gross domestic product (GDP) contracted by 0.1% in November, down from 0.3% growth in October. The lackluster numbers stem from a mix of sliding oil prices, US-China trade tensions, and the central bankâs rate hike in late October.
The federal statistics agency further reported that wholesale trade dipped 1% to $63 billion, manufacturing sales fell 1.4% to $57 billion, and retail sales dropped 0.9% to $50.4 billion.
While the BOC is pleased with Canadaâs labor growth, the central bank will rely on data to determine interest rates moving forward. Carolyn Wilkins, Senior Deputy Governor, says rate moves will depend on wages, structural factors, and if the job market is really doing well.
The answers to these questions will help the Bank find the right path for interest rates to meet our inflation objective. They will also help businesses and governments develop strategies to boost Canadaâs prosperity over the longer term.
In other data, consumer confidence experienced a 6.7% gain and raw material sales rose 3%.
The USD/CAD currency pair rose 0.25% to 1.3135, from an opening of 1.3102. The EUR/CAD edged up 0.05% to 1.5014, from an opening of 1.5006.
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