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The Canadian dollar weakened to a six-week low against its U.S. counterpart on Thursday as oil prices slumped, pressured by the prospect of additional U.S. tariffs on Chinese goods.

In a series of tweets, U.S. President Donald Trump said he would slap 10 per cent tariffs on $300-billion of Chinese imports starting Sept. 1.

Trump’s comments had a “knock-on effect on commodities, particularly oil,” said Michael Goshko, corporate risk manager at Western Union business solutions. “The Canadian dollar is a particularly oil-sensitive currency.”

The price of oil, one of Canada’s major exports, fell to the lowest level in about six weeks. U.S. crude oil futures settled 7.9 per cent lower at $53.95 a barrel.

At 4:39 p.m. (2039 GMT), the Canadian dollar was trading 0.2 per cent lower at 1.3213 to the greenback, or 75.68 U.S. cents. The currency, which fell 0.8 per cent against the U.S. dollar in July, hit its lowest intraday level since June 20 at 1.3248.

The loonie lost ground despite data showing that Canadian manufacturing activity expanded for the first time in four months in July. The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) rose to a seasonally adjusted 50.2 last month from 49.2 in June.

The PMI data helped limit the decline for the Canadian dollar, said Simon Harvey, a market analyst at Monex Canada and Monex Europe.

Firm domestic data has supported the Bank of Canada’s view that the economy is picking up, Harvey said.

Canadian government bond prices were higher across the yield curve, with the two-year up 13 Canadian cents to yield 1.479 per cent and the 10-year rising 74 Canadian cents to yield 1.399 per cent.

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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 20/05/24 0:40pm EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
-0.04%0.73437

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