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Canadian dollar weakens 0.4% against the greenback
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Touches its weakest since Jan. 4 at 1.3665
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Flash estimate shows wholesale trade up 3% in January
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Canadian bond yields rise across curve
(Adds analyst quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 24 (Reuters) - The Canadian dollar weakened
to a seven-week low against its U.S. counterpart on Friday as
worries about the Federal Reserve's interest rate outlook offset
additional evidence the domestic economy remained robust at the
start of the year.
The loonie was trading 0.4% lower at 1.36 to the
greenback, or 73.53 U.S. cents, after touching its weakest level
since Jan. 4 at 1.3665. It was down 1% for the week, its second
straight weekly decline.
"I think it is pretty well all (U.S.) dollar driven for
today's USD-CAD price action," said Jay Zhao-Murray, a market
analyst at Monex Canada Inc. "This shifting narrative toward
higher interest rates has been driving this risk-off dollar
bullish scenario, and if you throw in the classic month-end
flows effect from corporates and real money (investors), that's
driving a dollar bid, too."
Wall Street fell and the U.S. dollar rallied against
a basket of major currencies as U.S. consumer spending rebounded
sharply in January, while inflation accelerated, fueling fears
that the Fed could continue raising interest rates through the
summer.
It was not all bad news for the loonie. The price of oil, one of Canada's major exports, settled 1.2% higher at $76.32 a barrel on the prospect of reduced Russian supply. In addition, preliminary data showed that wholesale trade rose 3.0% in January from December. It follows a preliminary estimate on Tuesday that showed retail sales gaining 0.7% last month, while previous data for January showed the economy added 10 times more jobs than expected and manufacturing activity picked up.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasury yields. The 10-year climbed 6.3 basis points to 3.397%, moving back in reach of the three-month high it posted on Tuesday at 3.447%. (Reporting by Fergal Smith; Editing by Will Dunham)
