weakened to an 11-day low against its broadly stronger U.S. counterpart on Tuesday as slower-than-expected domestic economic growth supported bets the Bank of Canada would cut rates more deeply than the Federal Reserve.
The economy is likely to have expanded at a 2.5 per cent annualized rate in the first quarter, Canada’s national statistics agency added. That’s the fastest growth rate since the first quarter of 2023 but slightly slower than the BoC’s latest forecast of 2.8 per cent. Money markets see a roughly 60 per cent chance that the Canadian central bank begins cutting its benchmark interest rate in June and expect 54 basis points of easing in total by December, compared to 32 basis points from the Fed.
The move lower for the currency came as U.S. labor cost data boosted the U.S. dollar against a basket of major currencies and rising U.S. crude production weighed on oil, one of Canada’s major exports. U.S. crude futures were down 1.1 per cent at $81.73 a barrel.