The Canadian dollar weakened to a nearly one-year low against its U.S. counterpart on Monday before paring some of its losses, as global trade tensions weighed on stocks and investors worried about Canada’s trade feud with the United States.
At 5 p.m. EDT, the Canadian dollar was trading 0.1 per cent lower at $1.3200 to the greenback, or 75.76 U.S. cents. The currency touched its weakest level since June 27, 2017 at $1.3237.
“It is a continuation of what is a pretty bad story for CAD overall,” said Mazen Issa, senior FX strategist at TD Securities. “We’ve been sliding further down into the rabbit hole on the trade front.”
The loonie has been pressured recently by new U.S. tariffs on steel and aluminum imports as well as slow-moving talks to modernize the North American Free Trade Agreement.
Canada runs a current account deficit so its currency could also be hurt by souring of risk appetite.
Stocks on Wall Street slipped as investors eyed an escalating trade dispute between the United States and China while oil prices rose on bets that an OPEC production increase would be smaller than expected.
U.S. crude oil futures settled 1.2 per cent higher at $65.85 a barrel. Oil is one of Canada’s major exports.
Canadian government bond prices were higher across much of the yield curve. The two-year rose 3.5 cents to yield 1.873 per cent and the 10-year climbed 14 cents to yield 2.202 per cent.
A working group will present recommendations on enhancements to the Canadian overnight risk-free rate by the end of the year, and the Bank of Canada will seek broader input on interest rate benchmark reform, Deputy Governor Lynn Patterson said.
Canadian inflation data for May and the April retail sales report are due on Friday.