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The Canadian dollar tumbled to a near three-year low against its U.S. counterpart on Monday as investors raised bets on further interest rate cuts from the Bank of Canada after the price of oil, one of Canada’s major exports, plunged by more than 20 per cent.

Oil prices lost as much as a third of their value in their biggest daily rout since the 1991 Gulf War as Saudi Arabia and Russia signaled they would hike output in a market already awash with crude after their three-year supply pact collapsed. U.S. crude oil futures were down nearly 23 per cent at $31.87 a barrel.

“The collapse in crude pricing has spurred on expectations of rate cuts by North American central banks,” Simon Harvey, FX market analyst for Monex Europe and Monex Canada, said in a note.

“The Canadian economy was already suffering from slowing economic activity in Q4 2019 before the added risk of the coronavirus and now a supply side shock to crude markets came into the picture,” Harvey said.

Money markets see it as likely that the Bank of Canada will ease in April by 50 basis points, which would match the size of last week’s rate cut.

At 9:24 a.m., the Canadian dollar was trading 1.3 per cent lower at 1.3606 to the greenback, or 73.50 U.S. cents. The currency touched its weakest intraday level since May 2017 at 1.3760.

Canadian housing starts fell 1.9 per cent in February compared with the previous month as groundbreaking decreased on multiple-unit urban homes, data from the Canadian Mortgage and Housing Corporation showed.

Canadian bond yields tumbled across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year yield hit a record low at 0.233 per cent and was last down 35.5 basis points at 0.373 per cent.

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