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The Canadian dollar weakened to its lowest in nearly five months against a broadly firmer greenback on Tuesday, as concern about world trade tensions led to fluctuation in financial markets ahead of the G20 Summit this week.

U.S. stocks and the price of oil see-sawed after U.S. President Donald Trump’s threat to move ahead with additional tariffs on Chinese goods dampened hopes of resolving the trade spat between the two countries.

“There really doesn’t seem like there is much clarity on what kind of trade relations we’ll have after the G20,” said Mark McCormick, North American head of FX strategy at TD Securities. “I would say the Canadian dollar gets lumped into all of those negative forces.”

Canada exports many commodities, including oil, and runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.

U.S. crude oil futures settled 0.1 per cent lower at $51.56 a barrel.

At 3:30 p.m., the Canadian dollar was trading 0.3 per cent lower at 1.3295 to the greenback, or 75.22 U.S. cents. It touched its weakest level since June 28 at 1.3328.

The multi-month low for the loonie came after General Motors Co announced on Monday it would close its plant in Oshawa, Ontario, east of Toronto.

BMO Capital Markets estimated that the closure would reduce Canadian gross domestic product by between 0.1 per cent and 0.2 per cent over a full year.

Canada’s gross domestic product data for the third quarter is due on Friday.

The U.S. dollar reached two-week highs after Federal Reserve Vice Chair Richard Clarida backed further interest rate hikes, taking a less dovish stance than some investors had anticipated.

Canadian government bond prices were higher across the yield curve, with the two-year up 3.5 Canadian cents to yield 2.221 per cent and the 10-year rising 23 Canadian cents to yield 2.326 per cent.

The 10-year yield touched its lowest intraday since Sept. 13 at 2.325 per cent.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 17/05/24 4:59pm EDT.

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