By Commodity News Service Canada
WINNIPEG, March 2 – The Canadian dollar closed lower against the US dollar on Monday, undermined by soft Canadian economic data, analysts said.
Statistics Canada said the current account deficit for Canada in the fourth-quarter totalled a shortfall of C$13.9 billion, while expectations called for only a C$12.5 billion deficit.
The Canadian dollar closed at US$0.7978 or US$1=C$1.2535 on Monday, which compares with Friday’s North American settlement of US$0.7998 or US$1=C$1.2503.
Disappointing Canadian manufacturing data was also bearish. The RBC Canadian manufacturing purchasing managers’ index fell to 48.7 last month, from 51.0 in January.
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Continued worries about weak oil prices hurting Canada’s economy and news that China’s government is cutting interest rates to stimulate economic growth further undermined the loonie.
However, optimism that the Bank of Canada will not make another interest rate cut at Wednesday’s announcement was supportive.
Canadian bonds ended sharply lower on Monday, following weakness seen in the US Treasury market, according to participants.
The two-year bond yielded 0.496% Monday, from 0.474% late Friday. The 10-year bond yielded 1.389%, from 1.302%. Bond yields rise as their prices fall.
