CEP: Canadian Dollar Continues Downtrend Following Weaker Wholesale Sales
(CEP News) - A mixed loonie is generally worse-bid against major foreign currencies on Wednesday morning following a reported decrease in Canadian wholesale sales for October.
The decrease was substantially larger than the -0.5% drop expected by analysts and more than unwound the 1.1% sales increase recorded in September, which was revised from the previously reported +1.5%.
"On balance, this report is disappointing and suggests that October [gross domestic product] could kick off the third quarter with a fizzle," wrote TD Securities economics strategist Charmaine Buskas.
While wholesale sales is a lagging indicator, the loonie fell moderately against other major currencies on the data, released at 8:30 a.m. EST. The loonie is currently down 0.0053 to 0.5869 against the euro after a slight drop to 0.5868 on the data.
Meanwhile, the loonie fell 0.0006 to 0.5387 against the pound sterling on the data, with the cross now up 0.0051 to 0.5388.
The Canadian dollar conversely rose 0.04 points to 73.25 against the Japanese yen, but is now down 0.83 to 73.24. Similarly, the loonie rose 0.0007 to 1.2012 against the Australian dollar on the data. The CAD/AUD is currently trading at 1.2003 during the session.
Elsewhere, the third-quarter U.S. current account deficit came in at $174.1 billion at the same time. Prior to the release, economists were expecting to see a -$179.0 billion figure. The data compared favourably with the Q2 deficit of $175.6 billion.
With the narrowing of the deficit (combined with the weaker Canadian data), the loonie is now down 0.0032 to 0.8274 against the greenback, sustaining a 0.0006 drop to 0.8271 on the data releases. The CAD/USD is well off session highs of 0.8363, which represents the highest mark for the cross since Nov. 11. The Canadian dollar rally came on the heels of the Federal Open Market Committee (FOMC)'s decision to cut the Fed funds rate to 0.25% on Tuesday.
"USD consolidated its losses following the dramatic post-FOMC sell-off," wrote RBC Capital Markets rates and FX strategist Christian Lawrence. "A speech today by [Bank of Canada] Governor Carney entitled "From Hindsight to Foresight" will be listened to closely for hints as to how low rates may go and for signs of an additional steps the BoC might take in an ultra-low interest rate environment."
Carney is scheduled to speak at 12:20 p.m. EST in Toronto.
CAD/USD down 0.0032 to 0.8274.
CAD/EUR down 0.0053 to 0.5869.
CAD/JPY down 0.83 to 73.24.
CAD/GBP up 0.0051 to 0.5388.
CAD/AUD up 0.0027 to 1.2003.
