Friday May 5, 2017
TORONTO (Reuters) - The Canadian dollar weakened to a fresh 14-month low against its U.S. counterpart on Thursday as a slump in oil prices offset narrowing in the country's trade deficit.
At 4 p.m. EDT (2000 GMT), the Canadian dollar <CAD=D4> was trading at C$1.3765 to the greenback, or 72.65 U.S. cents, down 0.3 percent, according to Reuters data.
The currency touched its weakest since February 2016 at C$1.3778.
"It's building on momentum that has developed over the last several sessions, basically a perfect storm of bad news," said Mazen Issa, senior FX strategist at TD Securities.
Worries over funding problems at Canadian alternative mortgage lenders added to ongoing fears of a trade war with the United States and low oil prices.
U.S. crude oil futures <CLc1> settled 4.8 percent lower at $45.52 a barrel on signs major producers would not take more drastic steps to reduce a supply glut.
"It has pushed a lot of people in the speculative community to sell the Canadian dollar," Issa said.
Speculators have ramped up bearish bets on the Canadian dollar to the most since February 2016, data from the Commodity Futures Trading Commission and Reuters calculations showed last Friday.
Canada posted a trade deficit of C$135 million in March, down from a revised C$1.08 billion shortfall in February, as exports hit a record high on energy shipments.
"A strong first indicator on March GDP (gross domestic product) suggests that there could be some decent momentum heading into the second quarter," said Nick Exarhos, economist at CIBC Capital Markets.
The Canadian dollar will regain some ground over the coming months, a Reuters poll showed on Wednesday, as a pickup in the domestic economy could prod the Bank of Canada to raise interest rates by next year.
Canadian government bond prices were higher across the yield curve even as U.S. Treasuries lost ground on expectations the Federal Reserve was likely to raise interest rates again in June.
Canada's 10-year <CA10YT=RR> rose 12 Canadian cents to yield 1.532 percent, while the 2-year yield fell 2.5 basis points further under its U.S. equivalent to a spread of -62.1 basis points, its widest since April 2007.
Canada's April employment report is due on Friday. <ECONCA>