The Canadian dollar dropped against its U.S. counterpart on Friday after federal statistics revealed a surprise fall in factory revenue, while the greenback climbed broadly on prospects of a U.S. tax reform.
Manufacturing sales fell 0.4 percent in October, pulled down by poor sales of autos and other transport equipment. Analysts had forecast a 0.8 percent increase.
The U.S. dollar climbed 0.5 percent against a basket of major currencies on optimism that a tax bill could be passed by year-end.
The loonie got a boost on Thursday after Bank of Canada Governor Stephen Poloz said in a language that the central bank was convinced the economy will require less stimulation over time, even though the money gave up some gains following dovish opinions by Poloz in another interview.
“Just taking a look at the way the Bank of Canada communicates, it is much less clear, for example, as the Fed,” said Eric Viloria, currency strategist at Wells Fargo. “That does contribute somewhat more at the price swings in the Canadian dollar.”
The Bank of Canada is leaving the door open to further interest rate hikes in ancient 2018, which makes it evident that a number of uncertainties that could derail the market, such as NAFTA renegotiation, are a reason for caution but not inaction.
At 4 p.m. ET the Canadian dollar was trading in C$1.2878 to the greenback, or 77.65 U.S. cents, down 0.6 percent.
The money’s strongest level of this session was C$1.2740, while it touched its weakest since Tuesday in C$1.2890.
For the week, the loonie dipped 0.2 percent.
The money lost ground despite higher costs of oil, one of Canada’s leading exports.
U.S. crude prices settled 0.5 percent higher at $57.30 a barrel, supported by a pipeline outage in the North Sea.
Speculators have trimmed bullish bets on the Canadian dollar for eight of the past nine weeks, data in the U.S. Commodity Futures Trading Commission and Reuters calculations revealed. As of Dec. 12, net long positions had slipped to 41,960 contracts from 42,466 per week earlier.
Canadian government bond prices were mixed across a flatter yield curve, together with the two-year down 1.5 Canadian pennies to yield 1.555 percent and the benchmark 10-year rising 17 Canadian cents to yield 1.834 percent.
The gap between Canada’s 10-year return and its U.S. equal widened by 2.4 basis points to a spread of –51.5 basis points.