May 11, 2020 / 8:36 PM / 21 days ago

CANADA FX DEBT-Canadian dollar slides as risk of second infection wave weighs

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar falls 0.6% against the greenback
    * Loonie touches its strongest intraday since April 3 at
1.3901
    * Price of U.S. oil decreases 2.4%
    * Canadian bond yields were little changed across the curve

    By Fergal Smith
    TORONTO, May 11 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as the potential for a
second wave of coronavirus infections worried investors, with
the loonie retreating from an earlier 11-day high.
    The Canadian dollar        was trading 0.6% lower at 1.4008
to the greenback, or 71.39 U.S. cents. The currency, which
strengthened 1.1% last week, touched its strongest intraday
level since April 30 at 1.3901.
    "Its not really a CAD story since the USD is up across all
the majors today," said Tony Valente, senior FX dealer at
AscendantFX. "Over the last few weeks, the CAD has been more
correlated to risk sentiment then oil prices."    
    The U.S. dollar       , seen as a safe-haven currency, rose
against a basket of major currencies as Germany and South Korea
reported a surge in COVID-19 cases after easing lockdowns.
    Canada runs a current account deficit and is a major
exporter of commodities, including oil, so the loonie tends to
be sensitive to the global flow of trade and capital.
    U.S. West Texas Intermediate (WTI) crude        settled 2.4%
lower at $24.14 a barrel as worries about a second wave of
coronavirus infections offset new output cuts from Saudi Arabia.
            
    Newly appointed Bank of Canada Governor Tiff Macklem
projected a halting economic recovery during an interview with
Reuters conducted before he was named, suggesting he would
continue the central bank's loose monetary policy approach.
            
    Canada said on Monday it would create a bridge financing
facility for large employers and the expansion of its lending
program to middle-sized businesses that need support to get
through the economic downturn caused by the coronavirus.
            
    Data on Friday showed that Canada lost a record-breaking 2
million jobs in April and that speculators had increased their
bearish bets on the Canadian dollar to the heaviest since last
June.                          
    Canadian government bond yields were little changed across
the curve on Monday, with the 10-year yield             at
0.586%.

 (Reporting by Fergal Smith; Editing by Alistair Bell and Peter
Cooney)
  
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