The Canadian dollar tumbled to a 2-week low against the US dollar during Wednesday's early trading as the crude oil prices fell over 2 percent toward $48 a barrel. Traders also pondered over yesterday's economic report, which showed that the Canadian GDP slipped for a sixth straight month in January.
Statistics Canada reported that Canada's economy contracted in line with expectations in January, with real gross domestic product (GDP) down 0.7% from December. The drop was lead by a decline in the output of manufacturing, particularly motor vehicle and associated parts industries, Statistics Canada reported. Wholesale trade and construction also contributed to the decline.
U.S. crude for May delivery fell $1.20 to $48.46 by 10:23 p.m. ET, erasing much of Tuesday's 2.6 percent gain that lifted the contract to $49.66 a barrel. London Brent crude fell $1.03 to $48.20.
The loonie slipped against the euro too and dropped to a 1-week low. The Canadian dollar also showed weakness against the yen and the Aussie.
The Canadian dollar that closed yesterday's deals at 1.2383 against the US dollar, fell to a 2-week low of 1.2719 by about 12:30 am ET Wednesday. On the downside, the next likely support level for the Canadian currency is seen around 1.275.
From US, the ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released at 8:15 am ET. The report is usually released two days prior to the Labor Department's employment report.
The results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out at 10 am ET today. Economists expect the index to show a reading of 36 for March.
At the same time, the Commerce Department's construction spending report to be released and it is expected to show a 1.6% decline in spending for February.
Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is also due out at 10 am ET. The index is likely to show a 2% decline for February.
The Canadian currency edged down against the Japanese yen, sliding to 77.48. This may be compared with Tuesday's New York session closing value of 78.58. If the Canadian currency drops further, 76.6 is seen as the next likely target level.
On the economic front, the much-awaited BoJ Tankan survey showed a record decline for large manufacturers index. Japanese sentiment among large manufacturers plummeted at a record rate in the first quarter of 2009, posting a diffusion index score of -58. That was worse than analyst expectations for -55 following a score of -24 in the previous quarter.
It was the sixth straight quarter of decline, and the fall of 34 points from the previous survey in December marked the largest fall on record.
During early Asian deals on Wednesday, the Canadian dollar slipped to its lowest point since March 25 against the euro. The loonie hit as low as 1.6767 against the euro. The next downside target level for the Canadian dollar is seen at 1.687 level. The euro-loonie pair was worth 1.6699 at yesterday's close.
German retail sales, Euro-Zone unemployment report, Italian, German, French and Euro-Zone manufacturing PMI reports are scheduled for release in the upcoming session from the euro- area.
Against the Australian dollar, the Canadian dollar showed strength during Wednesday's early Asian trading. But after hitting as high as 0.8668 by about 8:30 pm ET, the loonie has lost some pips and is now quoted at 0.8747. At yesterday's North American session close, the pair was quoted at 0.8715.
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