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Canadian Dollar Weakens as US-China Trade War Overshadows Upbeat Data

May 23, 2019 at 18:23 by Andrew Moran

Many 100-CAD notesThe Canadian dollar is weakening against several major currency rivals as investor fears over the escalation in the US-China trade war overshadowed upbeat economic data. Despite the disappointing performance midway through the second quarter, the loonie is still in positive territory on the year.

On the sales front, it was expansion across the board.

According to Statistics Canada, retail sales rose 1.1% in March, up from 1% in February. March automobile sales surged 1.7%, up from 0.7% in the previous month. Wholesale trade spiked 1.4% in March, up from a tepid 0.2% in February. All these numbers were better than what the market had anticipated, too.

Investors will now wait until next week for key announcements and data. To finish the month, the Bank of Canada (BOC) will announce its decision on interest rates, the first quarter current account will be released, and the labor market will show off its average weekly earnings.

The Canadian dollar could not take advantage of the positive numbers as investors were concerned about the ongoing US-China trade spat. Since the Great White North exports numerous commodities and runs a current account deficit, the national economy would be impacted by a slowdown in the global flow of capital or trade.

Canada is already growing at an anemic pace. In February, the gross domestic product (GDP) contracted 0.1% — and there are no signs that the economy could roar like the economy south of the border.

The loonie further plunged on crashing crude oil prices. July West Texas Intermediate (WTI) crude futures crashed $3.63, or 5.91%, to $57.80 per barrel on the New York Mercantile Exchange. Oil’s losses were offset by rallying natural gas prices as July futures soared $0.045, or 1.77%, to $2.59 per million British thermal units (btu).

The USD/CAD currency pair climbed 0.35% to 1.3484, from an opening of 1.3435, at 18:00 GMT on Thursday. The EUR/CAD advanced 0.58% to 1.5068, from an opening of 1.4980.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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