The Canadian dollar is trading a bit lower against multiple currency competitors to start the trading week, driven by a recent string of disappointing economic numbers, including a surprising economic contraction in October. The loonie has still been one of the best-performing currencies among G20 nations, but anemic growth could affect its performance heading into 2020.
According to Statistics Canada, the gross domestic product (GDP) contracted 0.1% in October, down from the 0.1% growth in September. The market had penciled in a 0.1% gain.
The contraction represents the first decline since April as weakness in manufacturing and services impacted the Great White North. The manufacturing sector fell by 1.4%, while durable manufacturing slid 2.3% due to the United Auto Workers strike that affected Canadian plants and parts producers.
This comes as it was reported that retail sales slumped 1.2% in October after they were flat in the previous month. Year-on-year, retail sales have tumbled 0.6%.
On the housing front, new housing prices edged up 0.1% in October but slipped 0.1% in November.
Could these bearish figures push the Bank of Canada (BoC) to start easing monetary policy and cutting interest rates? For now, the central bank has signaled that it is holding off on a rate cut, leaving the benchmark rate at 1.75%. Some analysts say that the soft patch may be temporary and the BoC might be playing the long game. Its counterparts do not seem to be as patient, reducing rates during the boom phase of the business cycle.
Despite gains in energy prices, they could not lift the loonie. February West Texas Intermediate (WTI) crude oil futures picked up $0.18, or 0.3%, to $60.63 a barrel. February natural gas futures plunged $0.10, or 4.6%, to $2.222 per million British thermal unit (btu).
The USD/CAD currency pair rose 0.02% to 1.3157, from an opening of 1.3155, at 17:37 GMT on Monday. The EUR/CAD advanced 0.1% to 1.4583, from an opening of 1.4567.
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