THE Canadian dollar weakened against its US counterpart on Friday, as a further slide in the price of oil offset domestic data showing above-target inflation and increased retail sales.
Canada's annual inflation rate remained above the central bank's target of 2 per cent for the ninth straight month in October and retail trade volumes climbed 0.5 per cent in September, data showed. "This morning's data were a little bit better overall than what was expected ... but they weren't enough, it was the weakness in oil that dominated," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
The price of oil, one of Canada's major exports, slumped to the lowest point in more than a year amid fears of a supply glut even as major producers consider cutting output. US crude oil futures settled 7.7 per cent lower at US$50.42 a barrel.
At 3.22 pm the Canadian dollar was trading 0.2 per cent lower at 1.3224 to the greenback, or 75.62 US cents. The currency, which on Tuesday touched its weakest level in nearly five months at 1.3318, traded in a range of 1.3185 to 1.3259. For the week, the loonie fell 0.6 per cent.
A large discount for Canadian heavy crude has added to the headwinds for Canada's energy sector. Western Canadian Select (WCS) traded last month as much as US$52.50 per barrel below West Texas Intermediate light oil, the biggest differential in data going back to 2010, according to Shorcan Energy Brokers.
Economists say that if the price received by Canadian producers remains depressed, it could shave as much as 0.5 per cent from Canada's economic growth next year. REUTERS