January 29, 2020 / 9:10 PM / in 25 days

CANADA FX DEBT-Canadian dollar sinks to 7-week low as virus threat weighs

 (Adds strategist quote and details throughout; updates prices)
    * Canadian dollar weakens 0.3% against the greenback
    * Loonie touches a seven-week low at 1.3210
    * Price of U.S. oil decreases 0.3%
    * Canadian bond yields fall across a flatter yield curve

    By Fergal Smith
    TORONTO, Jan 29 (Reuters) - The Canadian dollar weakened to
a seven-week low against its U.S. counterpart on Wednesday as
concern that the coronavirus outbreak would hurt global economic
growth weighed on the price of oil and commodity-linked
currencies.
    At 3:31 p.m. (2031 GMT), the Canadian dollar          was
trading 0.3% lower at 1.3196 to the greenback, or 75.78 U.S.
cents. The currency touched its weakest intraday level since
Dec. 11 at 1.3210.   
    "Coronavirus fears that had flared up yesterday morning and
had faded out by yesterday afternoon, had returned overnight to
pummel the economically-sensitive currencies in the commodity
block and in the emerging markets," said Karl Schamotta, chief
market strategist at Cambridge Global Payments.
    Canada is a major exporter of commodities, including oil, so
the loonie tends to be sensitive to prospects for the global
economy. Among G10 currencies, only the Norwegian crown       ,
which is also linked to oil prices, fared worse.
    U.S. crude oil futures        settled 0.3% lower at $53.33 a
barrel, pressured by the potential for lower demand and swelling
U.S. crude inventories.             
    Last week, the Bank of Canada opened the door to a future
interest rate cut should a recent slowdown in domestic growth
persist. Canada's gross domestic product data for November is
due on Friday.                   
    The U.S. dollar        gained ground against a basket of
major currencies as the Federal Reserve held interest rates
steady at its first policy meeting of the year, with officials
pointing to continued moderate U.S. economic growth and a
"strong" job market.             
    U.S. President Donald Trump signed a new trade pact among
the United States, Mexico and Canada. Canada sends about 75% of
its exports to the United States.             
    Canadian government bond yields fell across a flatter yield
curve in sympathy with U.S. Treasuries. The 10-year yield, which
on Tuesday hit a near four-month low intraday at 1.283%, was
down 6.8 basis points at 1.307%.

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter
Cooney)
  
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