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The Canadian dollar weakened by the most in nearly five weeks against its U.S. counterpart on Monday, as investors grew more worried about the outlook for the global economy and eyed a Bank of Canada interest rate decision this week.

U.S. stocks tumbled as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the U.S. economic recovery.

“The loonie has suffered from the deterioration in the global economic outlook today,” said Simon Harvey, FX market analyst for Monex Europe and Monex Canada.

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“With Canada’s second wave aligning with that in Europe and the loonie’s price action linked with oil market dynamics, the loonie hasn’t found any shelter in today’s risk-off selling,” Harvey said.

Oil , one of Canada’s major exports, settled 3.2 per cent lower at $38.56 a barrel, while the safe-haven U.S. dollar rose against a basket of major currencies.

The Canadian dollar was trading 0.6 per cent lower at 1.3197 to the greenback, or 75.77 U.S. cents, its biggest drop since Sept. 23. The currency touched its weakest intraday level since Oct. 16 at 1.3225.

Speculators have raised their bearish bets on the Canadian dollar to their highest in seven weeks, data from the U.S. Commodity Futures Trading Commission showed on Friday.

The Bank of Canada is due to make an interest rate decision and update its economic outlook on Wednesday. The central bank has said it will leave rates at a record low of 0.25 per cent until its 2 per cent inflation target is achieved sustainably, which it does not expect for at least two years.

Canadian government bond yields were lower across much of a flatter curve in sympathy with U.S. Treasuries on Monday. The 10-year yield fell 1.6 basis points to 0.627 per cent, extending its pullback from Friday’s eight-week high of 0.680 per cent.

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