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The Canadian dollar weakened against its U.S. counterpart on Wednesday as the Bank of Canada delivered its biggest interest rate cut in more than 10 years and signalled it was ready to ease further because of the coronavirus outbreak.

At 4:19 p.m. (2119 GMT), the Canadian dollar was trading 0.1 per cent lower at 1.3393 to the greenback, or 74.67 U.S. cents. The currency traded in a range of 1.3330 to 1.3432.

“All eyes were on the Bank of Canada today,” said Andrew Sierocinski, a foreign exchange analyst at Klarity FX in San Francisco.

The loonie weakened because the Bank of Canada chose to match the previous day’s 50-basis-points interest rate cut by the Federal Reserve and signalled it was ready to ease further, Sierocinski said.

The central bank said the virus outbreak was “a material negative shock” to the Canadian and global outlooks as it slashed its benchmark interest rate to 1.25 per cent from 1.75 per cent. It was the first time since March 2009, during the global financial crisis, that it had cut by more than 25 basis points.

“The virus is expected to take a greater toll on Canada’s economy than the U.S.’s due to weaker commodity prices and less underlying strength,” Sal Guatieri, a senior economist at BMO Capital Markets, said in a note.

“Lower rates are no vaccine, but they can partially treat the symptoms of the virus by supporting confidence and shoring up financial conditions,” Guatieri said.

Canada is prepared to act quickly to help companies hurt financially by the outbreak of the new coronavirus and would not need to wait for the next budget, Finance Minister Bill Morneau said on Tuesday.

The price of oil, one of Canada’s major exports, gave up early gains as major oil producers struggled to bring Russia on board for deeper supply cuts to try to offset a slump in demand caused by the virus outbreak. U.S. crude oil futures settled 0.9 per cent lower at $46.78 a barrel.

Canadian government bond yields were mixed across a steeper yield curve. The two-year fell 5.4 basis points to 0.927 per cent, while the 10-year was up 2.8 basis points at 0.992 per cent. Earlier in the session, the 10-year yield touched a record low at 0.857 per cent

Canadian labour productivity fell by 0.1 per cent in the fourth quarter, as both hours worked and business output were little changed, Statistics Canada said.

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