(Updates pricing and adds activity descriptions)
* Loonie declines 2.7 percent in June * Canadian GDP drops 0.3 percent in April * US oil prices rise 0.7 percent * Canadian 10-year yield falls 2.9 basis points to 1.388 percent
Fergal Smith contributed to this article.
Reuters, TORONTO, June 30 – On Wednesday, the Canadian dollar was little changed against its widely higher US counterpart, despite statistics showing that the country’s economy shrank less than expected in April, marking the currency’s worst monthly drop since March last year.
The loonie was practically flat against the greenback at 1.2400 Canadian cents, or 80.65 US cents. It had previously fallen to 1.2423, its lowest level since June 21.
The loonie has lost 2.7 percent this month as the US currency has risen due to the Federal Reserve’s hawkish shift in stance. Concerns about the spread of the Delta coronavirus type fueled a rally in the safe-haven greenback against a basket of foreign currencies.
As a result of the COVID-19 outbreak, Canadian GDP decreased 0.3 percent in April, exceeding analyst expectations of a 0.8 percent drop, according to Statistics Canada statistics.
According to a preliminary assessment, the economy shrank by 0.3 percent in May. Some provinces held off on easing restrictions until June.
“The setbacks in April and May were most likely temporary,” said Sri Thanabalasingam, senior economist at TD Economics. “A rapid rebound in economic activity should result from reopening across the country, reducing cases and hospitalizations, and an unprecedented vaccine deployment.”
Despite the drop in June, the Canadian dollar has gained 2.7 percent since the start of 2021, the most among the G10 currencies. Higher commodity prices have aided this.
Oil, one of Canada’s main exports, surged in price when industry data indicated that US crude stockpiles were reducing.
Crude oil futures in the United States ended the day 0.7 percent higher at $73.47 a barrel.
Canadian government bond yields fell as the curve flattened, mirroring the trend in US Treasuries.
With the bond market closing early ahead of the Canada Day vacation on Thursday, the 10-year fell 2.9 basis points to 1.388 percent.
(Fergal Smith contributed reporting; Andrea Ricci and Nick Zieminski edited the piece.)/n
