The Canadian dollar was little changed against its U.S. counterpart on Friday, unable to reduce this week’s decline as oil prices fell and a strike at Canada’s biggest railroad threatened to weigh on the country’s economic growth.
The price of oil, one of Canada’s major exports, pulled back from two-month highs as concern over U.S.-China trade talks overshadowed expectations that major producers would extend production cuts. U.S. crude oil futures settled 81 cents lower at $57.77 a barrel.
“The Canadian dollar is following oil a little bit directionally,” said Rahim Madhavji, president at KnightsbridgeFX.com.
“Kind of lurking in the background, this whole CN Rail strike ... the downside is if there is a prolonged strike there could be a potentially more significant impact on the economy,” Madhavji added.
The strike at Canadian National Railway Co was in its fourth day on Friday with no sign of a deal between the company and the workers’ union.
TD Bank estimated that annualized economic growth for the fourth quarter could be reduced by about 0.2 per cent were the strike to continue for another two weeks.
At 4:00 p.m., the Canadian dollar was trading nearly unchanged at 1.3290 to the greenback, or 75.24 U.S. cents. The currency, which traded on Friday in a range of 1.3255 to 1.3298, was down 0.5 per cent for the week.
The loonie had been on track to lose even more ground this week before comments by Bank of Canada Governor Stephen Poloz on Thursday that doused expectations for an interest rate cut as soon as next month.
The decline for the loonie on Friday came as the U.S. dollar
was boosted by data showing U.S. factory and services activity quickened in November.
Domestic data showed that retail sales fell 0.1 per cent in September from August, matching estimates.
Investors have cut bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of Nov. 19, net long positions in the currency had fallen to 28,865 contracts from 42,373 in the prior week.
Canadian government bond prices were mixed across a flatter yield curve, with the two-year down 3 cents to yield 1.58 per cent and the 10-year rising 5 cents to yield 1.472 per cent.
Canada’s housing market has turned the corner and prices will increase modestly faster over the coming few years, a Reuters poll of economists and property market analysts predicted.
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