Canada’s dollar declined versus its U.S. peer as the nation’s merchandise trade deficit widened in April, boosting speculation economic growth will lag behind that in its largest trading partner.
The currency dropped against the majority of its most-traded peers as Canada recorded its 16th straight trade deficit, the longest run in at least a quarter century. The Canadian dollar posted its biggest gain in almost a year yesterday as a manufacturing slowdown in the U.S. damped speculation the Federal Reserve will reduce stimulus that tends to devalue the currency. A report June 7 is forecast to show Canada’s unemployment rate held unchanged in May.
“We’ve got an emerging U.S. economic-strength story that’s propelling the U.S. dollar higher across the board,” Mark Frey, chief market strategist at Cambridge Mercantile Group, a global foreign exchange and payments provider, said by phone from Victoria. “Canada is being punished by some relative under-performance from a domestic standpoint.”
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