The Canadian dollar fell 0.2% to 1.4125 per U.S. dollar after touching a two-month low of 1.4149, as broad U.S. dollar strength and weaker Canadian retail sales weighed on the currency. Retail sales fell 0.7% in July; a preliminary estimate showed a 1.3% rebound in August.
The Canadian dollar weakened against its U.S. counterpart on Thursday as the U.S. dollar gained broadly and domestic retail sales data did little to ease concern about Canada's economic outlook. The loonie traded 0.2% lower at 1.4125 per U.S. dollar, or 70.80 U.S. cents, after reaching 1.4149, its weakest intraday level since July 14.
Canadian retail sales fell 0.7% in July, led by declines at general merchandise retailers. A preliminary estimate showed sales rebounding 1.3% in August, but analysts did not expect sustained strength. Tony Valente of AscendantFX said the loonie's decline appeared more tied to interest rates and U.S. dollar strength than to a sudden Canada-specific shock, while trade uncertainty and softer demand were weighing on the outlook.
The U.S. dollar index reached a two-month high as investors bet on further Federal Reserve rate hikes following strong recent U.S. economic data. U.S. crude futures rose 2.3% to $94.25 a barrel as the United States and Iran discussed a phased deal to reopen the Strait of Hormuz and end a U.S. blockade. Canadian two-year bond yields eased 1.6 basis points to 3.384%, while 10-year yields were little changed at 3.956%.
