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THE Canadian dollar strengthened to a four-month high against its US counterpart on Friday (Aug 23) as Federal Reserve chair Jerome Powell signalled the start of interest rate cuts and preliminary domestic data showed retail sales rising in July.
The loonie was trading 0.8 per cent higher at C$1.3510 to the US dollar, or 74.02 US cents, after touching its strongest intraday level since Apr 4 at C$1.3506. For the week, the currency was up 1.2 per cent, its biggest weekly advance since December.
“The US dollar is sinking on a surprisingly dovish speech from Powell,” said Adam Button, chief currency analyst at ForexLive. “He is telling us if there’s any stumble in the jobs market the Fed will be there, and perhaps aggressively.”
The greenback extended recent declines against a basket of major currencies and Wall Street rallied after Powell said “the time has come” to reduce interest rates.
The Bank of Canada has already begun cutting rates as it shifts its focus to boosting the economy.
Canadian retail sales fell 0.3 per cent in June as consumers continued to feel the impact of high interest rates. Still, flash estimates showed retail sales rebounding 0.6 per cent in July and manufacturing sales rising 1.1 per cent.
Workers at Canadian National Railway returned to work on Friday, while a lockout at rival Canadian Pacific Kansas City has yet to be officially lifted after the Canadian government moved on Thursday to end an unprecedented rail stoppage.
Canadian government bond yields moved lower across the curve, tracking moves in US Treasuries. The 10-year was down 4.5 basis points at 3.023 per cent. REUTERS
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