TORONTO – The Canadian dollar weakened against its US counterpart on May 11, posting its sharpest decline since early March, as oil prices fell and US data provided further evidence the economy is slowing.
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The loonie was down 0.8 percent at $1.3490 against the greenback, or 74.13 US cents, its biggest drop since March 7. It has traded in a range of 1.3364 to 1.3495.
“Looks like a mix of lower oil prices and reaction to US PPI and early claims reports,” said Amo Sahota, a director at Klarity FX in San Francisco.
The number of Americans filing new jobless claims rose last week to its highest level in a year and a half, and producer prices rebounded slightly in April.
The data was seen as in line with most economists’ expectations for a recession by the end of the year. Canada sends about 75 percent of its exports to the United States, including oil.
Oil prices fell 2.3 percent as a political row over the US debt ceiling fueled recession fears, while another bust in the region’s banking sector weighed on Wall Street.
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Meanwhile, the US dollar gained ground against a basket of major currencies, helped by losses in sterling despite another rate hike by the Bank of England.
Sterling’s sell-off “triggered demand for USD that affected all major currencies,” Sahota said.
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Canadian government bond yields declined along a flatter curve, following moves in US Treasuries. The 10-year bond yield fell 7.8 basis points to 2.828 percent.
© Thomson Reuters 2023
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