Skip to main content

The Canadian dollar weakened against its U.S. counterpart on Thursday as investors grew more concerned about the economic impact of the coronavirus and the Bank of Canada left the door open to further interest rate cuts to cushion the blow.

At 3:54 p.m. (2054 GMT), the Canadian dollar was trading 0.2% lower at 1.3415 to the greenback, or 74.54 U.S. cents. The currency, which last Friday hit a nine-month low at 1.3465, traded in a range of 1.3383 to 1.3439.

The Canadian economy’s resilience could be “seriously tested” by the coronavirus outbreak, depending on its severity and duration, Bank of Canada Governor Stephen Poloz said. On Wednesday, the central bank slashed its key interest rate by half a percentage point and said it was prepared to cut further if needed to help tackle the effects of the virus.

Money markets are expecting a further rate cut by June when Poloz is due to step down. It would leave the governor setting interest rates near historic lows to support the broader economy at the risk of stoking higher prices in a housing market that is heating up. That was also the situation he faced when his term began seven years ago.

“Looks like CAD might continue to weaken as long as bond yields continue to collapse,” said Michael Goshko, corporate risk manager at Western Union Business Solutions.

U.S. Treasuries rallied as the market weighed the implications of increasing coronavirus quarantines on the global economy, while Canada’s 10-year yield tumbled nearly 17 basis points to hit a record low at about 0.850%.

Canada runs a current account deficit and is a major exporter of commodities, including oil, so a downdraft for the global economy could hurt.

Stocks tumbled globally and the price of oil settled 1.9% lower at $45.90 a barrel.

Canada’s jobs report for February is due on Friday.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 23/02/24 4:59pm EST.

SymbolName% changeLast
Canadian Dollar/U.S. Dollar

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe