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Canadian dollar hits 2-week as data flags potential Nov economic contraction

Published 2019-01-22, 09:56 a/m
© Reuters.  Canadian dollar hits 2-week as data flags potential Nov economic contraction
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* Canadian dollar falls 0.3 percent against the greenback

* Canadian factory sales fall 1.4 percent in November

* Canadian wholesale trade falls 1.0 percent in November

* Canadian bond prices rise across the yield curve

By Fergal Smith

TORONTO, Jan 22 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday, pressured by investor worries about the outlook for the global economy and weaker-than-expected data that could point to a contraction in Canada's economy in November.

Canadian factory sales were down 1.4 percent in November from October on lower petroleum and coal product sales, Statistics Canada said. Analysts had forecast a decrease of 0.9 percent. data from Statistics Canada showed that Canadian wholesale trade decreased by 1.0 percent in November from October, as weaker sales in the machinery, equipment and supplies subsector led the decline. Analysts had forecast no change. still need to get retail sales of course but I have negative 0.1 (percent) penciled in for November GDP," said Ryan Brecht, a senior economist at Action Economics.

Canada's retail sales report for November is due on Wednesday.

The Bank of Canada expects low oil prices and a weak housing market to harm the economy in the short term. Money markets expect the central bank, which has hiked interest rates five times since July 2017, to leave rates on hold over the coming months. 9:38 a.m. (1438 GMT), the Canadian dollar CAD=D4 was trading 0.3 percent lower at 1.3342 to the greenback, or 74.95 U.S. cents. The currency touched its weakest since Jan. 7 at 1.3354.

The decline for the loonie came as stocks and the price of oil were pressured by fears of a slowdown in the global economy. It follows the International Monetary Fund's warning on Monday of a darkening outlook. crude oil futures CLc1 fell 2.2 percent to $52.63 a barrel.

Canada exports many commodities, including oil, so its economy could be hurt if the global economy slows.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 5.5 Canadian cents to yield 1.91 percent and the 10-year CA10YT=RR climbed 26 Canadian cents to yield 1.987 percent.

On Friday, the 10-year yield touched its highest intraday in one month at 2.049 percent.

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