The Canadian dollar closed lower Wednesday amid a big miss on June retail sales.
But the currency was well off session lows as the greenback weakened after minutes from the most recent Federal Reserve rate announcement encouraged hopes for further economic stimulus.
The loonie lost 0.17 of a cent to $1.0087 (U.S.) as Statistics Canada reported that retail sales fell 0.4 per cent, against expectations of a 0.1 per cent rise.
“The trend in retail sales volumes looks flat to slightly down since the start of the year,” said CIBC World Markets chief economist Avery Shenfeld.
“Store closures in general merchandise fed into the weak June results, but there were [also] scattered declines across several other categories.”
Fed minutes from the most recent meeting on interest rates showed many members felt further support for the economy would be needed “fairly soon” unless the economy improved significantly. The minutes didn’t say what steps might be taken. The boldest move would be to launch a new program of bond buying to try to lower long-term interest rates to encourage more borrowing and spending.
The Fed makes its next interest rate announcement Sept. 13. The central bank could also announce new stimulus measures at that time.
But analysts said the minutes should be read with caution since there has been a string of positive economic data since the last Fed meeting Aug. 1, including stronger than expected job creation in July, improving retail sales and consumer confidence, and rising applications for building permits.
The October crude price on the New York Mercantile Exchange climbed 42 cents to $97.26 a barrel.
Copper kept intact Tuesday’s 8-cent runup, closing unchanged at $3.45 a pound.
December bullion slipped $2.40 to $1,640.50 an ounce.
Traders also took in a speech by Bank of Canada governor Mark Carney, who was addressing the Canadian Auto Workers meeting in Toronto.
He told his audience that they shouldn’t look to the loonie as the major reason for falling Canadian exports.
“While there is some truth to that, it is not the most important reason,” he said.
“Over the past decade, our poor export performance has been explained two-thirds by market structure and one-third by competitiveness. Of the latter about two-thirds is the currency while the rest is labour costs and productivity.”
In mid-July, the bank announced it was leaving its key rate unchanged at one per cent. But it also maintained language in its accompanying statement that signalled an eventual tightening bias, indicating that rates would rise at some point.Report Typo/Error