Poor Economic Reports Signal About Slower Recovery, CAD Down

The Canadian dollar fell today as the investors’ sentiment shifted to the risk aversion after the reports from the US, Europe and Canada itself signaled that the global recovery is faltering, decreasing the appeal of the growth-related currencies. The currency rose against the euro.

The claims for the unemployment benefits unexpectedly rose last week in the US from 453,000 to 465,000. The manufacturing and services industries in the European countries, including Germany and France, declined noticeably more than predicted. The reports from Canada this week showed that the inflation grew slower than forecast and the retail sales unexpectedly shrank.

Canadian Imperial Bank of Commerce forecast that the economy would grow less than 2 percent in each of the next three quarters through March 2011. The outlook for the slower economic growth makes the economists expect that the Bank of Canada would normalize the interest rates more gradually.

USD/CAD rose from 1.0302 to 1.0334 today as of 19:56 GMT, following the advance to 1.0377. EUR/CAD slipped from 1.3808 to 1.3763 after it reached the intraday high of 1.3862.

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