Canadian dollar retreats from 4-month high after rail shutdown
TORONTO, Aug 22 (Reuters) – The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from a four-month high, as the greenback notched broad-based gains and a work stoppage at Canada’s top two railroads threatened to disrupt the domestic economy.
The loonie was trading 0.1% lower at 1.3605 to the U.S. dollar, or 73.50 U.S. cents, after touching its strongest intraday level since April 10 at 1.3572.
Canadian National Railway Co (CNR.TO), opens new tab and Canadian Pacific Kansas City Ltd (CP.TO), opens new tab locked out more than 9,000 unionized workers, triggering an unprecedented rail stoppage that could cause billions of dollars worth of economic damage.
“The rail shutdown now underway should instill a growing sense of alarm in those holding bullish (Canadian dollar) positions,” Karl Schamotta, chief market strategist at Corpay, said in a note.
“With the federal government thus far refusing to intercede in negotiations between Canadian National Railway, Canadian Pacific Kansas City, and the Teamsters union, the prospect of a prolonged lockout is raising the threat of serious economic damage.”
The Bank of Canada has already shifted its focus to boosting the economy, analysts say, cutting its benchmark interest rate twice since June to 4.50%. Investors expect more than 200 basis points of additional easing by the end of 2025.
The U.S. dollar (.DXY), opens new tab rebounded from an eight-month low against a basket of major currencies ahead of remarks, due on Friday, by Federal Reserve Chair Jerome Powell at a central banking conference in Jackson Hole, Wyoming.
The price of oil, one of Canada’s major exports, was supported by a drop in U.S. fuel inventories. U.S. crude futures rose 1.6% to $73.08 a barrel, recouping some recent declines.
Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 5.9 basis points at 3.076%.
Source from Reuters: https://www.reuters.com/markets/currencies/canadian-dollar-retreats-4-month-high-after-rail-shutdown-2024-08-22/