July 7, 2020 / 8:41 PM / a month ago

CANADA FX DEBT-Canadian dollar falls as worries rise about renewed virus lockdowns

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar retreats 0.5% against the greenback
    * Loonie trades in a range of 1.3525 to 1.3609
    * Ivey PMI shows purchasing activity expanding in June
    * Canadian bond yields ease across a flatter curve

    By Fergal Smith
    TORONTO, July 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as investors grew more
worried about renewed coronavirus lockdowns slowing economic
recovery, with the loonie pulling back from a near two-week high
the day before.
    A five-day charge by world stocks          fizzled after
pandemic lockdown measures were reimposed in Melbourne,
Australia, and large parts of the United States reported tens of
thousands of new coronavirus infections.             
    "The general mood in markets today is more hostile to the
Canadian dollar," said Adam Button, chief currency analyst at
ForexLive. "Canada is more tied to the United States than any
other currency."
    Canada sends about 75% of its exports to the United States,
including oil. U.S. crude oil futures settled 1 cent lower at
$40.62 a barrel, while the Canadian dollar        was down 0.5%
at 1.3608 to the greenback, or 73.69 U.S. cents.             
    Among G10 currencies, only the Norwegian crown        lost
more ground. The loonie, which on Monday notched its strongest
intraday level since June 23 at 1.3616, traded in a range of
1.3525 to 1.3609.
    Adding to headwinds for the loonie was news on Monday that
the U.S. Supreme Court rejected a request from President Donald
Trump's administration to allow construction to start on
Keystone XL, a planned oil pipeline running from Alberta to
Nebraska.             
    "The outlook for Canadian oil exports to the United States
is darkening and we are seeing that reflected in the Canadian
dollar today," Button said.
    Still, Ivey Purchasing Managers Index (PMI) data showed
signs of economic recovery, with Canadian purchasing activity
expanding in June for the first time in four months.
                
    Canadian government bond yields eased across a flatter curve
in sympathy with U.S. Treasuries. The 10-year             was
down 3 basis points at 0.515%.
    Canadian Finance Minister Bill Morneau is due to present a
fiscal snapshot on Wednesday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Peter Cooney)
  
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