Canadian dollar continues retreat, down almost a penny to below 78 cents US

The Canadian dollar is extending its losing streak to two days with the loonie down almost a cent on Wednesday.

In early afternoon trading, the dollar was down 0.98 of a cent at 77.68 cents US.

Since it briefly touched 80 cents US on Friday, the loonie has given back more than two cents. It lost 1.11 cents on Tuesday.

The hit to the loonie on Wednesday followed the release of figures that showed Canada's trade deficit for March grew to a record $3.4 billion, which was much more than the $1.4-billion deficit economists had been expecting.

Canada's trade surplus with the United States, our biggest trading partner, narrowed to $1.5 billion in March, the lowest surplus since December 1993.

The loonie bottomed out against the U.S. dollar in January, when it dipped below 69 cents US.

CIBC economist Nick Exarhos said the March trade figures suggest the first quarter ended on a weak note. While CIBC still forecasts growth in the quarter to come at an annualized rate of three to 3.5 per cent, they suggest it means the Canadian economy lost much of its momentum after a strong December and January for output.

"That should give pause to those who would rush to pull forward Bank of Canada rate hikes, and in the process bid up the Canadian dollar much further," Exarhos said.

The price of oil, to which the loonie is closely tied, was slightly higher Wednesday. Benchmark North American crude was up five cents at $43.70 US a barrel.

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