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The Canadian dollar weakened to a nearly three-week low against its U.S. counterpart on Monday as fallout from the Turkish lira’s crash rippled through asset markets.

World markets shuddered as Turkey’s currency crisis prompted investors to dump equities and emerging market assets for safe-haven currencies such as the greenback and the Japanese yen. The loonie’s movement was less wild than some other currencies but it still touched its weakest since July 24 before paring its losses.

Canada exports many commodities and runs a current account deficit so its economy could be hurt if the flow of trade or capital slows. A diplomatic row between Saudi Arabia and Canada in recent days has added to pressure on the loonie.

For years, Canadian pressure on human rights in Saudi Arabia had elicited no more than a standard rejection. But all that changed last week, when a Canadian complaint was translated into Arabic and set off a diplomatic row.

The prospect of Saudi Arabia selling Canadian assets and safe-haven demand for the U.S. dollar “have really taken the starch out of Canada,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “The U.S. has been king of the hill for a number of days now and there is just no pushing that tide back.”

The greenback notched its strongest in more than 13 months against a basket of major currencies.

The price of oil, one of Canada’s major exports, was pressured by worries that troubled emerging markets and trade tensions will dent demand and data suggesting inventories at the U.S. crude delivery hub rose in the latest week.

U.S. crude oil futures settled 0.6 per cent lower at $67.20 a barrel.

At 3:07 p.m. EDT, the Canadian dollar was trading 0.1 per cent lower at $1.3145 to the greenback, or 76.07 U.S. cents. The currency hit a session low of $1.3179.

Still, recent data has pointed to strengthening of Canada’s economy and has showed that speculators have cut bearish bets on the country’s currency.

The move lower for the loonie “seems to be driven more by external factors than by the overall domestic economy,” Goshko said.

Canadian government bond prices were mixed across the yield curve, with the 10-year rising 2 Canadian cents to yield 2.300 per cent.

Canada’s July inflation report is due on Friday.

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