The Canadian dollar traded at an almost six-week low against its U.S. counterpart on signs from Europe and China that global economic growth is slowing, undermining demand for Canada’s exports.
The currency pared losses against its U.S. counterpart after a report showed Canada’s retail sales rose more than forecast in February. Euro-area services and factory output shrank for a 15th month in April as the currency bloc struggled to emerge from a recession, adding to pressure on the European Central Bank to do more to boost growth. A report showed Chinese manufacturing expanding at a slower pace this month.
“We certainly expect the Canadian dollar to trend lower this year because of the forecast weakening in the domestic economy,” David Madani, an economist at Capital Economics Ltd., said by phone from Toronto. “As it becomes clearer the domestic economy is weaker, I think there will be speculation at some point of interest-rate cuts and that’s when the dollar will start to move lower.”
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