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Market News Canadian dollar retreats from six-day high but beats most other G10 currencies

The Canadian dollar edged lower against its broadly stronger U.S. counterpart on Thursday but performed better than most other G10 currencies as oil prices rose and domestic factory data pointed to faster growth in the economy.

Canadian factory sales were up by 2.1 per cent in March from February on higher motor vehicle sales, as well as petroleum and coal products, Statistics Canada said. Analysts surveyed by Reuters had forecast a 1.1 per cent increase in the value of shipments.

“Today’s reading suggests a likely healthy advance in March monthly GDP, and will support the street’s view that growth will outperform the Bank of Canada’s pessimistic view for Q1,” said Royce Mendes, senior economist at CIBC Capital Markets in a note.

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The central bank has projected the economy grew by 0.3 per cent in the first three months of the year after barely any growth in the fourth quarter.

The Bank of Canada said on Thursday the overall risk to the Canadian financial system was slightly higher than in June 2018 and expressed concern about the increasing threat posed by fragile corporate debt funding.

Separate data, from ADP, showed that Canada added 61,700 jobs in April, the second straight month of robust jobs gains.

The price of oil, one of Canada’s major exports, rose as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its crude infrastructure. U.S. crude oil futures settled 1.4 per cent higher at $62.87 a barrel.

At 4:20 p.m. (2020 GMT), the Canadian dollar was trading 0.2 per cent lower at 1.3460 to the greenback, or 74.29 U.S. cents, which was the second smallest decline among G10 currencies after the safe-haven Swiss franc.

The loonie touched its strongest intraday level since May 10 at 1.3401.

The U.S. dollar rose to its highest level in nearly two weeks against a basket of major currencies as investors focused on trade war tensions, while the euro was hurt by concerns about this weekend’s European parliamentary elections.

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Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries after data showing stronger-than-expected U.S. housing starts in April.

The two-year declined 1 Canadian cent to yield 1.587 per cent and the 10-year was down 12 Canadian cents to yield 1.680 per cent.

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