The Canadian dollar had its biggest drop in more than a year against its U.S. peer as gold led commodities down with its biggest loss in 33 years after China’s growth slowed more than forecast in the first quarter.
The currency weakened against the majority of its 16 most- traded peers on speculation slowing growth at home and abroad will lead the Bank of Canada to trim its economic growth forecast at a policy meeting April 17. Data released last week showed retail sales in the U.S., Canada’s largest trading partner, unexpectedly contracted in March. Commodities, including crude oil, Canada’s biggest export, fell.
“I do think it’s the continued downdraft in commodities and not only does that affect demand for the Canadian dollar in and of itself, but also probably has raised concerns about our domestic economy,” said David Doyle, a strategist at Macquarie Capital Markets by phone from Toronto. “If the Bank of Canada is confronted with a softness in commodity prices, if anything their statement and tone will probably shift to becoming more dovish, which I think would only pile on weakness to the CAD at this point.”
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