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The Canadian dollar CADUSD weakened to its lowest level in 17 months against its U.S. counterpart on Monday as rising worries about the global economic outlook weighed particularly heavily on commodity-linked currencies.

The loonie was trading 0.6% lower at 1.2985 to the greenback, or 77.01 U.S. cents, after touching its weakest level since December 2020 at 1.30.

“A lot of commodity currencies are just getting smoked against the (U.S.) dollar,” said Mazen Issa, senior FX strategist at TD Securities in New York.

“What was a very strong terms-of-trade tailwind for these currencies that helped them outperform in Q1 (the first quarter), some of that is being reversed just because these currencies need to see strong growth to maintain their loftiness.”

Some other commodity-linked currencies fell more sharply than the loonie, including the Australian and New Zealand dollars, as well as the Norwegian crown.

The price of oil, one of Canada’s major exports, settled 6.1% lower at $103.09 a barrel and stocks globally

extended recent declines as China’s two largest cities tightened COVID-19 curbs. Investors have also been worrying about the economic impact of higher interest rates as central banks tackle inflation.

Bank of Canada Deputy Governor Toni Gravelle is due to speak on Thursday on the topic of commodities, growth and inflation, which could offer clues on the interest rate outlook. Money markets expect the central bank to raise its benchmark rate by half a percentage point for a second straight policy meeting on June 1.

Canadian government bond yields pulled back from fresh multiyear highs, tracking the move in U.S. Treasuries. The 10-year touched its highest since May 2011 at 3.173% before sliding to 3.028%, down 9.7 basis points on the day.

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