CANADA FX DEBT-Canadian dollar hits 2-week low as greenback broadly rallies

06/11/2021 | 10:26am

* Canadian dollar weakens 0.3% against the greenback
* Loonie touches a two-week low at 1.2140
* Canadian industry capacity use rise to 81.7%
* Canadian 10-year yield hits a 3-month low

By Fergal Smith
TORONTO, June 11 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, extending a weekly
decline, as the greenback broadly rose and domestic data showed
industries operating at a greater share of their capacity in the
first quarter.
The loonie was trading 0.3% lower at 1.2135 to the
greenback, or 82.41 U.S. cents, after touching its weakest
intraday level since May 27 at 1.2140. For the week, it was on
track to fall 0.5%.
The U.S. dollar rallied against a basket of major
currencies as U.S. Treasury yields stabilized. Yields fell on
Thursday as the market deemed a spike in inflation to be
transitory.
Canadian industries ran at 81.7% of capacity in the first
quarter of 2021, up from an upwardly revised 79.7% in the fourth
quarter of 2020, Statistics Canada said.
"The report tracks the impact of the boom in the housing and
resource extraction industries as the economy reflates," said
Ryan Brecht, a senior economist at Action Economics.
On Wednesday, the Bank of Canada said there remains
considerable excess capacity in the Canadian economy.

Still, the BoC's more hawkish stance since April and soaring
commodity prices have helped boost the Canadian dollar, with the
currency up nearly 5% against the U.S. dollar since the start of
the year.
A stronger loonie is usually seen hurting exporters, but the
nature of the global economic recovery could help companies pass
on their higher costs from the currency to customers, leaving
exporters in less pain than in previous cycles.
Oil , one of Canada's major exports, rose on Friday to
a fresh multi-year high at $70.80 a barrel.
Canadian government bond yields were mixed across the curve,
with the 10-year up 1.2 basis points at 1.383%.
Earlier in the day, it touched its lowest since March 3 at
1.368%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)


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