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The Canadian dollar was little changed against its U.S. counterpart on Tuesday, with the loonie hovering near a two-month low it hit the previous day as concern lingered that China’s coronavirus outbreak would hurt demand for commodities.

The price of oil, one of Canada’s major exports, fell as fears that energy demand would take a long-term hit from the outbreak offset prospects for more cuts in crude production from OPEC and its allies. U.S. crude oil futures were down 0.6 per cent at 49.80 a barrel.

“The underlying environment is still quite fragile,” said Shaun Osborne, chief currency strategist at Scotiabank. “Within the next week or so we should get a better sense of whether this is going to be contained.”

Stocks rallied globally after the People’s Bank of China injected liquidity into money markets

At 2:54 p.m., the Canadian dollar was trading nearly unchanged at 1.3283 to the greenback, or 75.28 U.S. cents. The currency, which hit a two-month low on Monday at 1.3302, traded in a range of 1.3264 to 1.3301.

Trade confidence among Canadian exporters fell to its lowest level in nearly a decade, Canada’s export credit agency said, as businesses wrestle with protectionist policies and fret about the global economy.

Canadian trade data for December is due on Wednesday and the January jobs report is awaited on Friday, both of which could guide expectations for the Bank of Canada interest rate outlook.

Last month, the Canadian central bank left the door open to an interest rate cut should a recent slowdown in domestic growth persist. Money markets see about a 60 per cent chance that it will ease by April.

Canadian government bond yields rose across a steeper yield curve, with the 10-year yield rising 8 basis points to 1.338 per cent. On Monday, it hit its lowest intraday level in nearly four months at 1.252 per cent.

Canada’s Federal Court of Appeal dismissed a challenge to the approval by Prime Minister Justin Trudeau’s government of the Trans Mountain oil pipeline expansion, clearing some uncertainty from the project.

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