Skip to main content

Market News Canadian dollar pulls back from six-week high as oil prices slide

The Canadian dollar weakened against its U.S. counterpart on Wednesday, pulling back from a six-week high the day before, as oil prices fell and the greenback broadly climbed.

At 3:43 p.m., the Canadian dollar was trading 0.3 per cent lower at 1.3194 to the greenback, or 75.79 U.S. cents. The currency traded in a range of 1.3140 to 1.3215.

Lower oil prices were “the main driver” of the Canadian dollar, said Simon Côté, managing director, risk management solutions, at National Bank Financial.

Story continues below advertisement

There was no discernable impact from Wednesday’s kickoff of a six-week Canadian federal election campaign in which Prime Minister Justin Trudeau’s Liberals face a tight race.

The price of oil, one of Canada’s major exports, was put under pressure by a report that U.S. President Donald Trump weighed easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about global energy demand.

U.S. crude oil futures settled 2.9 per cent lower at $55.75 a barrel, while the U.S. dollar climbed against a basket of major currencies, including the euro, a day before the European Central Bank is expected to add further stimulus in a bid to boost the region’s economy.

Data from Statistics Canada showed that Canadian industrial capacity usage rose more than expected to 83.3 per cent in the second quarter, adding to the batch of upbeat economic reports that has helped boost the loonie by 0.9 per cent since the start of the month.

On Tuesday, the loonie posted its strongest intraday level since July 31 at 1.3134.

“It feels here as if my (U.S.) dollar sellers, mostly corporate, are sitting on long-dollar positions,” Côté said. “If that movement on U.S.-CAD resumes to the downside, at some point somebody will have to sell more dollars ... that’s where I think the risk is of a bigger move.”

The loonie’s gains this month have coincided with a rally in global stocks . In addition, the Bank of Canada last week held its benchmark interest rate unchanged at 1.75 per cent and made no mention of future rate cuts despite easing this year by many of its global peers, including the U.S. Federal Reserve.

Story continues below advertisement

Canadian government bond prices edged higher across much of the yield curve, with the two-year up 2.5 cents to yield 1.584 per cent and the benchmark 10-year rising 10 cents to yield 1.418 per cent.

Still, the 10-year yield touched its highest intraday level since Aug. 1 at 1.442 per cent.

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
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter