CANADA FX DEBT-Loonie dips as investors await Canada's response to US tariff threat
By Fergal Smith
TORONTO, Jan 9 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart for a third-straight day on Thursday as investors questioned the wisdom of suspending Canada's parliament at a critical time for the economy, and awaited domestic jobs data.
The loonie CAD= was trading 0.1% lower at 1.4390 per U.S. dollar, or 69.49 U.S. cents, after moving in a range of 1.4366 to 1.4404.
Canadian Prime Minister Justin Trudeau said on Monday he would step down in the coming months and that parliament would be prorogued until March 24.
"Risk sentiment is a bit softer, equities are lower, the U.S. dollar is broadly higher and I think Trudeau's decision to prorogue parliament is not really coming off well," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
"Markets basically got to wait in limbo now for 2-1/2, three months, while the threat of tariffs looms."
U.S. President-elect Donald Trump has promised to impose steep tariffs on trade partners, including a 25% tax on imports from Canada.
A 25% tariff, if imposed on Canada alone, could reduce the nation's gross domestic product by nearly 3%, leaving the economy in recession, said Stephen Brown, deputy chief North America economist at Capital Economics, in a note.
Canada is considering slapping retaliatory tariffs on a slew of U.S. products, including orange juice, a report said.
The Canadian dollar is set to recoup only a small part of its recent losses in the coming year as expected U.S. tariffs cloud the economic outlook, a Reuters poll found.
Canadian employment data for December, due on Friday, is expected to show the economy adding 25,000 jobs and the unemployment rate at 6.9%, up from 6.8% in November.
The Canadian 10-year CA10YT=RR yield was up 1.1 basis points at 3.347%, trading just below a six-week high.
(Reporting by Fergal Smith; Editing by Rod Nickel)
((fergal.smith@thomsonreuters.com; +1 647 480 7446;))
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