TORONTO, June 27 (Reuters) – The Canadian dollar weakened against the U.S. dollar on Friday as uncertainty over a trade deal between Canada and the United States increased. This followed a post by U.S. President Donald Trump on Truth Social, where he announced the immediate end of trade negotiations with Canada due to its digital services tax on tech companies. The U.S. is the destination for about 75% of Canada’s exports.
Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull, noted that the Canadian dollar had been under pressure all morning due to weaker GDP figures, lower oil prices, and a stronger U.S. dollar. He added that Trump’s announcement significantly impacted the Canadian currency.
The Canadian dollar was trading 0.6% lower at 1.3720 per U.S. dollar, or 72.89 U.S. cents, reaching its weakest level since Monday at 1.3758. For the week, the currency gained 0.1%.
Canada’s gross domestic product fell 0.1% in April compared to March, driven by a 0.6% decline in goods-producing industries. U.S. tariff uncertainty prompted some motor vehicle manufacturers to reduce production. Preliminary data showed a further 0.1% drop in May.
Doug Porter, chief economist at BMO Capital Markets, suggested that the underlying weakness in growth and employment might lead to additional interest rate cuts.
Investors expect a roughly 60% chance that the Bank of Canada will keep its benchmark interest rate steady at 2.75% during its July 30 policy decision but are leaning toward a cut in September.
Canadian bond yields declined across a flatter curve, with the 10-year yield down 2.9 basis points at 3.311%, retreating from an earlier one-week high of 3.377%.
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Canadian dollar slides as Trump scraps trade talks with Canada
TORONTO, June 27 (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday as the outlook for a trade deal between Canada and the United States grew suddenly more uncertain and after data earlier in the day showed a contraction in the domestic economy.
U.S. President Donald Trump said in a post on Truth Social that the U.S. is immediately ending trade talks with Canada in response to the country ‘s digital services tax on technology companies. Canada sends about 75% of its exports to the U.S.
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“We ‘ve been kind of weak all morning after the weaker GDP print, lower oil prices, the U.S. dollar bouncing,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
“This Trump post about terminating all discussions with Canada has seen the floor fallout from underneath the Canadian dollar.”
The loonie was trading 0.6% lower at 1.3720 per U.S. dollar, or 72.89 U.S. cents, after touching its weakest intraday level since Monday at 1.3758. For the week, the currency was up 0.1%.
Canada ‘s gross domestic product fell 0.1% in April from March, led by a 0.6% decline in goods-producing industries as U.S. tariff uncertainty spurred some motor vehicle manufacturers to scale back production. A preliminary estimate showed a further decline of 0.1% in May.
“We suspect that the underlying softness in growth and employment will eventually pave the way for additional (interest) rate relief,” Doug Porter, chief economist at BMO Capital Markets, said in a note.
Investors see a roughly 60% chance the Bank of Canada leaves its benchmark interest rate on hold at 2.75% at a policy decision on July 30 but are leaning toward a cut in September.
Canadian bond yields moved lower across a flatter curve. The 10-year was down 2.9 basis points at 3.311%, pulling back from an earlier one-week high at 3.377%.
Reporting by Fergal Smith; Editing by Alistair Bell and Diane Craft