The Canadian dollar slipped to a near six-month low against its U.S. counterpart on Thursday as oil prices fell for a fifth straight day on a rise in new coronavirus cases outside China that fuelled fears of a pandemic.
At 3:40 p.m. EST, the Canadian dollar was trading down about 0.3 per cent at 1.3371 to the greenback, or 74.79 U.S. cents, its lowest since Sept. 3.
Oil prices tumbled to their lowest since January 2019, as further novel coronavirus cases outside China fanned fears that a pandemic could slow the global economy and erode demand for crude. Oil is one of Canada’s major exports.
No country should make the “fatal mistake” of assuming it will be spared the coronavirus, the World Health Organization said on Thursday, as governments from Iran to Australia raced to contain the epidemic’s rapid global spread.
Asia reported hundreds of new cases, Brazil confirmed Latin America’s first infection and the new disease – COVID-19 – was also detected for the first time in Pakistan, Sweden, Norway, Greece, Romania and Algeria.
“While U.S.-Canadian interest rate differentials continue to move against the U.S. dollar, weaker crude oil prices are a clear headwind for the Canadian dollar,” Shaun Osborne, chief FX strategist at Scotiabank in Toronto, said in a note.
Canada’s current account deficit narrowed to $8.76 billion in the fourth quarter from a revised $10.86 billion deficit in the third quarter, on a lower trade deficit on goods, Statistics Canada said on Thursday.
The loonie is also bracing for Canada’s GDP data for December, which is scheduled for release on Friday and is expected to have remained unchanged at 0.1 per cent.
“A downside surprise to Q4 GDP would increase the likelihood of Canada cutting interest rates,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Canadian government bond prices rose across the maturity curve, with the two-year price up 0.441 cents to yield 1.266 per cent and the benchmark 10-year rising 0.472 cents to yield 1.168 per cent.
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