The Canadian dollar weakened against its U.S. counterpart on Thursday as investors re-evaluated prospects of the global economy recovering quickly from the coronavirus crisis.
World shares took their biggest tumble in five weeks as a sobering economic outlook from the U.S. Federal Reserve challenged market expectations and new coronavirus infections in the United States showed a slight increase after five weeks of declines.
The price of oil, one of Canada’s major exports, was also pressured by the Fed’s gloomy projections as well as another record buildup in U.S. crude inventories. U.S. crude prices were down 6.6% at $36.97 a barrel.
The Canadian dollar was trading 0.6% lower at 1.3496 to the greenback, or 74.10 U.S. cents. The currency, which on Wednesday notched its strongest intraday level in more than three months at 1.3311, traded in a range of 1.3398 to 1.3509.
Canada’s political consensus over help for those hit by the coronavirus outbreak began to fray on Wednesday when opposition legislators blocked a government move to approve a proposed expansion of benefits.
Ottawa is rolling out more than C$150 billion in direct aid for the economy, while the Bank of Canada has slashed interest rates to near zero and has begun a large-scale bond buying program for the first time.
Canadian government bond yields were lower across a flatter curve, with the 10-year down 4.5 basis points at 0.521%.
Canadian capacity utilization data for the first quarter is due on Friday.
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