June 4, 2020 / 1:40 PM / a month ago

CANADA FX DEBT-Canadian dollar retreats from 3-month high as exports slump

    * Canadian dollar weakens 0.2% against the greenback
    * Canada posts a trade deficit of C$3.25 billion in April 
    * Price of U.S. oil decreases 1.5%
    * Canada's 10-year yield was nearly unchanged at 0.619%

    By Fergal Smith
    TORONTO, June 4 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday, pulling back from an
earlier near three-month high, as oil prices fell and domestic
data showed a greater-than-expected plunge in exports due to the
coronavirus crisis.
    Canada posted a trade deficit of C$3.25 billion in April as
exports fell by nearly 30% to the lowest level in more than 10
years at C$32.7 billion. Analysts had forecast exports would be
C$42.1 billion.
    "This dismal report adds to the evidence that the economy
contracted sharply in April," said Ryan Brecht, a senior
economist at Action Economics. "However, the reopening of the
economy and recovery in energy prices in May suggests that April
will mark the bottoming out of activity."
    On Wednesday, the Bank of Canada said the impact of the
coronavirus pandemic on the global economy appears to have
peaked, while the Canadian economy seems to have avoided
worst-case scenario projections.             
    The price of oil, one of Canada's major exports, dropped on
doubts over the ability of crude producers to agree to extend
record output cuts. U.S. crude oil futures        were down 1.5%
at $36.73 a barrel.             
    The Canadian dollar        was trading 0.2% lower at 1.3522
to the greenback, or 73.95 U.S. cents. The currency touched its
strongest intraday level since March 9 at 1.3468.
    The loonie is likely to slip in coming months as a collapse
in global trade and the prospect of a more prolonged slowdown
from the coronavirus pandemic put pressure on the currency, a
Reuters poll showed.             
    Canadian government bond yields were mixed across a flatter
curve on Thursday as investors weighed the European Central
Bank's decision to ramp up its Pandemic Emergency Purchase
Programme to 1.35 trillion euros, a level that was beyond what
most analysts had predicted. The 10-year yield             was
nearly unchanged at 0.619%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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