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The Canadian dollar weakened to a near two-week low against its U.S. counterpart on Monday as the spread of the coronavirus epidemic outside China raised expectations that the Bank of Canada could cut interest rates as early as next week.

At 5 p.m., the Canadian dollar was trading 0.5 per cent lower at 1.3293 to the greenback, or 75.23 U.S. cents. The currency, which was up 0.2 per cent last week, hit its weakest intraday level since Feb. 11 at 1.3308.

“We’re seeing the loonie get sold off and tread water as a result of the ongoing concerns around what further spread of the coronavirus looks like for global growth,” said Scott Smith, managing partner at Viewpoint Investment Partners. “I think the BoC will be ready to act if necessary and it becomes a more long and drawn-out situation.”

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Last month, the Bank of Canada opened the door to an interest rate cut should a recent slowdown in domestic growth persist.

Chances that the bank would ease at the March 4 policy announcement climbed to about 30 per cent from less than 20 per cent on Friday. Less than a week ago, they were about l0 per cent.

The price of oil , one of Canada’s major exports, settled 3.7 per cent lower at $51.43 a barrel, while stocks across the globe posted their largest decline in over two years after a jump in coronavirus cases in Italy, South Korea, Japan and Iran sent investors scrambling to the security of gold and government bonds.

Canadian wholesale trade increased by 0.9 per cent in December from November on stronger sales in the motor vehicles and motor vehicle parts and accessories subsector, Statistics Canada said. Analysts had forecast a 0.5 per cent increase.

Canada’s GDP reports for December and for the fourth quarter are due on Friday.

Canadian government bond yields were lower across the yield curve on Monday in sympathy with U.S. Treasuries. The 10-year yield fell 8.1 basis points to 1.200 per cent, having touched its lowest intraday level since Sept. 4 last year at 1.170 per cent.

Police on Monday made 10 arrests and cleared a rail blockade by an indigenous group in eastern Canada that had been stopping freight and passenger traffic for almost three weeks on one of the country’s busiest lines.

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