Canadian Dollar Ends Session Slightly Weaker Amid Year-End Profit-Taking

Strategic Insights -

The Canadian dollar ended its session Monday slightly weaker, influenced by selling against the euro and profit-taking at the end of the year. The currency remained within a narrow trading range throughout the day, with its value negatively impacted by the anticipation of Canadian retail sales and GDP statistics. Despite the wholesale trade increasing by 0.2% in October, providing some support to the currency, the overall market mood remains uncertain. Analysts expect Canadian retail sales to have increased by 1.0% in October, but a weaker-than-expected number could exacerbate concerns about the Canadian dollar's impact on manufacturing and exports.

Key Takeaways:

  • The Canadian dollar ended the session slightly weaker, trading at 81.34 US cents (C$1.2271) at the close, down from Friday's North American closing mark of 81.49 U.S. cents (C$1.2271).
  • The currency remained narrowly rangebound throughout the day's trade, with year-end profit-taking putting pressure on the market.
  • Canadian wholesale trade increased by 0.2% in October, a stronger-than-expected result, which provided some support to the currency.
  • Analysts expect Canadian retail sales to have increased by 1.0% in October, but a weaker-than-expected number could reinforce concerns about the Canadian dollar's negative impact on manufacturing and exports.
  • The International Monetary Fund (IMF) predicted Canadian economic growth to reach 3% in 2005, but this had little impact on the bond market.
  • Year-end profit-taking could continue to weigh on the market in the days ahead, with participants awaiting the Canadian retail sales report on Tuesday and GDP statistics on Thursday.

Statistics:

  • The Canadian dollar closed at 81.34 US cents (C$1.2271) on Monday, down from 81.49 U.S. cents (C$1.2271) on Friday.
  • Canadian wholesale trade increased by 0.2% in October.
  • Analysts expect Canadian retail sales to have increased by 1.0% in October.
  • The International Monetary Fund (IMF) predicted Canadian economic growth to reach 3% in 2005.

Sources:

  • Resource News International (2004)
  • COMTEX (http://www.comtexnews.com)
  • International Monetary Fund (2005)