Canadian dollar extends weekly losing streak on BoC rate cut
Canadian dollar falls 0.2% against the greenback
For the week, the currency loses 0.6%
Retail sales increase 0.4% in August
10-year yield rises nearly 2 basis points
By Fergal Smith
TORONTO, Oct 25 (Reuters) -The Canadian dollar weakened to near 12-week low against its U.S. counterpart on Friday, pressured by the Bank of Canada's most recent interest rate cut and an uncertain outlook for the economy ahead of the Nov. 5 U.S. presidential election.
The loonie CAD= was trading 0.2% lower at 1.3880 to the U.S. dollar, or 72.05 U.S. cents, after touching its weakest intraday level since Aug. 5 at 1.3893.
For the week, the currency was down 0.6%, its fourth straight weekly decline, marking the longest such streak since January.
On Wednesday, the BoC reduced its benchmark rate by half a percentage point to 3.75% to support the economy, the first cut of that size in 15 years outside of the pandemic era.
"We're weaker on the week not surprisingly given the Bank of Canada's 50-basis-point rate cut," said Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets.
Canada's new immigration reduction targets announced this week will likely have a bigger impact on the BoC's growth forecast than on the inflation trajectory, Governor Tiff Macklem said.
"Part of what's gone on is you have a U.S. election coming up and there are risks to Canada and the Canadian dollar as part of the U.S. election. Until those risks are cleared there is a meaningful headwind for Canada," said Reitzes.
Republican U.S. presidential candidate Donald Trump has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States.
Domestic data showed that retail sales rose by 0.4% in August from July, slightly less than expected, while a preliminary estimate showed sales up 0.4% in September.
Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up nearly 2 basis points at 3.260%.
Reporting by Fergal Smith
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