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C$ posts biggest monthly loss since October as interest rate forecasts diverge | World news

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C$ posts biggest monthly loss since October as interest rate outlooks diverge

The Canadian dollar is down 0.7% against the greenback

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For April the currency weakens 1.5%

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Canadian GDP rises 0.2% in February

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Bond yields are rising, following the lead of US government bonds

By Fergal Smith

TORONTO, – The Canadian dollar weakened to an 11-day low against its broadly stronger U.S. counterpart on Tuesday, after slower-than-expected domestic economic growth supported bets that the Bank of Canada would cut rates deeper than expected. Federal Reserve.

Canada’s gross domestic product rose 0.2% in February, Statistics Canada said, missing estimates of a 0.3% gain, while a preliminary estimate for March showed GDP was “essentially unchanged.”

The economy is likely to have grown at an annual rate of 2.5% in the first quarter, Canada’s national statistics agency said. That’s the fastest growth rate since the first quarter of 2023, but slightly slower than the BoC’s last forecast of 2.8%.

“Lower expected growth in Canada and a more interest rate sensitive economy will likely force BoC policy to meaningfully diverge from the Fed in the coming quarters,” said Geoff Phipps, trade strategist and portfolio manager at Picton Mahoney.

Money markets see a roughly 60% chance that the Canadian central bank will start cutting rates in June and expect a total easing of 54 basis points in December, compared to 32 basis points from the Fed.

The Canadian dollar was trading 0.7% lower at 1.3750 per U.S. dollar, or 72.73 U.S. cents, after earlier hitting its weakest level since April 19 at 1.3760. For April, the loonie fell 1.5%, the biggest monthly drop since October.

The currency’s decline came as U.S. labor cost data boosted the U.S. dollar against a basket of major currencies and rising U.S. crude production weighed on oil, one of Canada’s top exports. U.S. crude futures fell 1.1% to $81.73 a barrel.

Canadian government bond yields rose across the curve, following the moves in US government bonds. The 10-year yield rose by 4.7 basis points to 3.808%.

This article was generated from an automated feed from a news agency without any changes to the text.

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