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The Canadian dollar on Monday ended 2018 with its worst annual performance in three years, hitting a 19-month low against its U.S. counterpart earlier in the day before reversing its decline as oil prices and stocks rallied.

The Canadian dollar was trading nearly unchanged at 1.3635 to the greenback, or 73.34 U.S. cents.

The currency, which has been pressured in recent months by a sharp drop in the price of oil, one of Canada’s major exports, and volatility in equity markets, hit its weakest intraday level since May, 2017, at 1.3665.

“It has been a pretty terrible year for the Canadian dollar,” said Rahim Madhavji, president at Knightsbridge Foreign Exchange. “The combination of a flight to safety plus weak oil is a recipe for disaster for the Canadian dollar.”

For the year, the loonie was down 7.7 per cent, its first decline since 2015.

Stocks were boosted on Monday by signs of progress in the U.S.-China trade dispute, while U.S. crude oil futures settled 0.2 per cent higher. Still, oil has fallen about 40 per cent since October.

“The fact that oil prices are down quite a bit is something that is going to worry the Bank of Canada,” Madhavji said.

The central bank has raised interest rates five times since July 2017 to leave its benchmark interest rate at 1.75 per cent. But money markets do not expect any further increases in 2019.

The U.S. dollar fell against a basket of major currencies in thin year-end trading as increased risk appetite weighed on demand for safe-haven currencies.

Canadian government bond prices were mixed across a steeper yield curve, with the two-year flat to yield 1.862 per cent and the 10-year falling 8 Canadian cents to yield 1.965 per cent.

In earlier trading, the two-year yield fell to its lowest since June 29 at 1.846 per cent.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 29/05/24 1:46am EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
-0.19%0.73141
USDCAD-FX
U.S. Dollar/Canadian Dollar
+0.19%1.3672

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