The Canadian dollar weakened against the U.S. dollar on Friday, following a decline in risk appetite and the release of negative data regarding Canada’s services sector, although the currency was still expected to record a weekly gain. The loonie fell by 0.2% to 1.3605 per U.S. dollar, or 73.50 U.S. cents, fluctuating between 1.3567 and 1.3612 during the day. For the week, it was projected to increase by 0.6%.
Shaun Osborne and Eric Theoret, strategists at Scotiabank, noted that a rise in risk aversion during light, late-week trading slightly reduced the Canadian dollar’s gains, but markets remain interested in buying CAD during minor dips, a view they support. A weak U.S. dollar trend, positive risk sentiment, and higher metal prices have improved the estimated fair value of the Canadian dollar over the past month, according to the strategists. Canada is a significant producer of copper and other commodities like oil.
With U.S. markets closed for Independence Day, attention has shifted to U.S. President Donald Trump’s July 9 deadline for implementing broad tariffs on countries without existing trade agreements with the United States. Canadian Prime Minister Mark Carney and Trump have agreed to finalize a trade deal by July 21.
Canada’s services economy contracted more sharply in June due to uncertainty from U.S. trade policies, which depressed activity and increased cost pressures, as shown by S&P Global’s Canada services PMI data. The Business Activity Index dropped to 44.3 last month from 45.6 in May.
Oil prices fell by 1% to $66.33 a barrel, anticipating that OPEC+ producers will decide to boost output this weekend, while the Canadian 10-year yield decreased by 3.3 basis points to 3.361%, after briefly reaching its highest level since June 16 at 3.402%.
— news from Reuters
— News Original —
Canadian dollar pares weekly gain as downturn deepens in services economy
TORONTO, July 4 (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday as the recent uptick in risk appetite lost momentum and after the release of downbeat data for Canada ‘s services sector, but the currency was still headed for a weekly gain.
The loonie was trading 0.2% lower at 1.3605 per U.S. dollar, or 73.50 U.S. cents, after moving in a range of 1.3567 to 1.3612. For the week, the currency was on track to advance 0.6%.
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“A spike in risk aversion in thin, late week trading has chipped away at the CAD’s rise (this week) a little but markets remain keen to pick up CAD on minor dips,” Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note. “This is a view we endorse.”
A weak trend for the U.S. dollar, positive risk sentiment and higher metal prices have contributed to an improvement in the estimated fair value of the Canadian dollar over the past month, the strategists said. Canada is a major producer of copper as well as other commodities, such as oil.
With the U.S. markets closed for Independence Day, attention has turned to U.S. President Donald Trump ‘s July 9 deadline for sweeping tariffs take to effect on countries that have not yet secured trade agreements with the United States. Canadian Prime Minister Mark Carney and Trump have agreed to reach some form of a trade deal by July 21.
Canada ‘s services economy contracted at a steeper pace in June as uncertainty generated by U.S. trade policy depressed activity and cost pressures increased, S&P Global ‘s Canada services PMI data showed. The headline Business Activity Index fell to 44.3 last month from 45.6 in May.
The price of oil fell 1% to $66.33 a barrel on expectations that OPEC+ producers will decide this weekend to raise output, while the Canadian 10-year yield was down 3.3 basis points at 3.361%, after earlier touching its highest level since June 16 at 3.402%.
Reporting by Fergal Smith; Editing by Chizu Nomiyama