Loonie falls more than a U.S. penny this week as investors turn to greenback
The Canadian loonie continued to fall Friday, shedding nearly three-quarters of a U.S. cent, for a weekly loss of more than a U.S. penny.
The Canadian dollar averaged 75.89 cents US, down 0.73 of a U.S. cent. It shed a total of 1.26 U.S. cents over the week.
"Today it's more U.S. strength versus Canadian weakness," said Allan Small, a senior investment adviser at HollisWealth.
When there's fear and uncertainty, people flock to the U.S. dollar, he said, adding that part of the current uncertainty is the appearance of a brewing global trade war.
"Tit for tat, tariff for tariff, etc., etc.," he said.
Surprisingly low manufacturing figures released Friday didn't help the loonie.
Factory sales dropped 1.3 per cent to $56.2 billion in April, according to Statistics Canada, as sales in the petroleum and coal products and transportation equipment industries dropped. Economists had expected an increase of 0.6 per cent, according to Thomson Reuters Eikon.
Weak economic data factors into whether the Bank of Canada will decide to raise its benchmark interest rate at its next meeting.
"Maybe July is not a slam dunk," said Small.
The U.S. Federal Reserve recently raised its rate for the second time this year and indicated it will do so a total of four times before the end of 2018.
That big discrepancy in interest rates makes the U.S. dollar more attractive for investors.
A strong greenback is bad for commodities, Small said, as both the price of oil and gold slipped, dragging down Canada's main index.
The S&P/TSX composite index fell 14.54 points to 16,314.42. Stocks in the energy sector lost on average 1.51 per cent of their worth, while those in the gold sector lost 1.2 per cent.
The July crude contract fell US$1.83 to US$65.06 per barrel and the August gold contract plummeted US$29.80 to US$1,278.50 an ounce.
In New York, the Dow Jones industrial average lost 84.83 points to 25,090.48. The S&P 500 index shed 2.83 points to 2,779.66 and the Nasdaq composite index declined by 14.66 points to 7,746.38.
Elsewhere in commodities, the July natural gas contract added about six cents to US$3.02 per mmBTU and the July copper contract retreated about eight cents to roughly US$3.14 a pound.