The loonie slips as weaker Canadian wholesale trade and a stronger US dollar weigh on
The Canadian dollar declined slightly against its US counterpart on Thursday, influenced by the US dollar's broad-based gains and a drop in domestic wholesale trade, according to Reuters.
The loonie retreated from a near four-week high achieved the previous day. It was trading 0.1 percent lower at 1.3725 to the US dollar, or 72.86 US cents, after reaching its strongest intraday level since July 18 at 1.3686 on Wednesday.
“A weak two-month performance from Canadian wholesale sales might be taking some strength from the loonie,” said Michael Goshko, senior market analyst at Convera Canada ULC.
Canadian wholesale trade fell by 0.6 percent month-over-month in June, following a 1.2 percent decline in May, particularly due to lower sales in the motor vehicle and motor vehicle parts and accessories subsector.
Additionally, separate data indicated that Canadian home sales fell by 0.7 percent in July compared to June.
The Bank of Canada has expressed concern that excessive economic slack could slow inflation more than anticipated.
The US dollar strengthened against a basket of major currencies after US economic data alleviated fears of a recession and reduced expectations for aggressive interest rate cuts from the Federal Reserve. According to Goshko, the possibility of a US soft landing could also benefit Canada’s economy.
Canada sends about 75 percent of its exports, including oil, to the United States. US crude oil futures settled 1.5 percent higher at $78.16 per barrel.
Canadian government bond yields increased across the curve, mirroring movements in US Treasuries. The 10-year yield rose by 5 basis points to 3.073 percent, following four consecutive days of declines.
