Canadian dollar slips as recession fears weigh on commodities

By Fergal Smith

TORONTO (Reuters) – The Canadian greenback weakened in opposition to its U.S. counterpart on Thursday as traders weighed the danger of a worldwide financial slowdown and preliminary home information confirmed manufacturing facility gross sales falling in Could.

The loonie was buying and selling 0.3% decrease at 1.2985 to the buck, or 77.01 U.S. cents, after touching its weakest since Monday at 1.3017.

“With recession fears spooking markets extra typically, commodity costs have been underneath strain at this time, which noticed the Canadian greenback additionally on its again foot,” mentioned Royce Mendes, director & head of macro technique at Desjardins.

Buying managers’ information confirmed a lack of financial momentum in some main European economies. Buyers are involved that rate of interest will increase to quell decades-high inflation will tip economies into recession.

The worth of oil, one in every of Canada’s main exports, settled 1.8% decrease at $104.27 a barrel as traders weighed the potential affect of slower financial progress on gasoline demand.

Preliminary home financial estimates for Could have been blended, with manufacturing facility gross sales falling 2.5% from April however wholesale commerce up 2%.

Nonetheless, cash markets anticipate the Financial institution of Canada to lift rates of interest three-quarters of a share level subsequent month after information on Wednesday confirmed inflation leaping to its highest in almost 4 a long time.

The central financial institution has come underneath a uncommon assault from critics after misjudging inflation and locking itself into inflexible ahead steerage that prevented it from reacting swiftly as costs surged and Canada’s economic system started to overheat.

Canadian authorities bond yields have been decrease throughout the curve, monitoring the transfer in U.S. Treasuries. The ten-year touched its lowest since June 10 at 3.224% earlier than recovering to three.294%, down 12.7 foundation factors on the day.

The Financial institution of Canada introduced the bond public sale schedule for the approaching quarter, together with 4 auctions of 10-year bonds.

(Reporting by Fergal Smith; Enhancing by Mark Heinrich)