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The Canadian dollar weakened to its lowest in more than one week against the greenback as oil prices fell, but the currency pared losses as investors weighed a possible end to the U.S.-China trade war.

U.S. stocks advanced as a Wall Street Journal report that the United States was considering lifting tariffs on Chinese imports eased investor worries.

Canada runs a current account deficit and exports many commodities including oil, so its economy could benefit from improved global trade.

Oil was pressured by fears about surging U.S. crude production and a weakening global economy. U.S. crude oil futures settled 0.5 per cent lower at $52.07 a barrel.

Late Thursday, the Canadian dollar was trading 0.1 per cent lower at 1.3272 to the greenback, or 75.35 U.S. cents. The currency touched its lowest since Jan. 8 at 1.3319.

The loonie had strengthened as much as 3.5 per cent since the beginning of 2019 before giving up some gains in recent days.

The loonie’s rally at the start of the year was “overdone,” said Scott Lampard, head of global markets at HSBC Bank Canada, adding that the U.S. Federal Reserve would be more active than the Bank of Canada in raising interest rates because of the stronger U.S. economy.

Canada’s economy is clawing its way through a soft patch, which will delay the next interest rate hike until at least April, according to economists polled by Reuters who said the Bank of Canada would be less aggressive in tightening credit this year.

Canada lost 13,000 jobs in December, driven by hiring declines in the trade, transportation and utilities and construction sectors, according to an ADP report released on Thursday. The November total jobs added was revised up to 74,000 from 39,100, ADP said.

Canada’s inflation report for December is due on Friday.

Canadian government bond prices were mixed across a steeper yield curve, with the two-year up 1 Canadian cent to yield 1.914 per cent, and the 10-year falling 3 Canadian cents to yield 1.999 per cent.

The gap between Canada’s 2-year yield and its U.S. equivalent widened by 3.5 basis points to a spread of 66.2 basis points in favor of the U.S. bond.

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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 17/05/24 4:59pm EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
+0.04%0.73463
USDCAD-FX
U.S. Dollar/Canadian Dollar
-0.03%1.36128

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