Canadian Dollar Hits Lows amid Commodity Pressure
The Canadian dollar reached two-week lows against the US dollar as investors gravitate toward US assets. Markets are expecting countries with dependence on commodities will suffer the brunt of the coronavirus impact.
The loonie traded 0.2% at 1.3313 to the dollar. Its weakest intraday level since February 10 was at 1.3322.
According to one strategist, Canada is “a little bit better placed” than some other countries. However, the loonie is still a risk-off currency, “so it’s taking a hit.”
It also doesn’t help that oil prices are down.
Meanwhile, the Australian dollar lost 0.7%.
The price of oil, a major export for Canada, slipped to its weakest level since January 2019. Asia, Europe, and Middle East oil producers reported hundreds of new coronavirus cases.
US crude prices lost 1.1% at $49.36 per barrel.
Canadian Dollar Suffers from Other Disruptions
Protesters in Canada blocked train lines, port entrance to Vancouver, and at least one highway in response to the arrest of 10 indigenous activists.
The arrest happened when police dismantled a rail barricade in southern Ontario the previous day.
Last month, the Bank of Canada hinted at a possible interest rate cut. The cut would be possible, it said, if a recent slowdown in local growth continued.
Canadian government bond yields were lower across a steeper yield curve. The ten-year lost one basis point to 1.204%.
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Dollar to Snap Losing Streak
Unlike the Canadian dollar, the US dollar is getting ready to cut its four-day losing streak, thanks to gains against the British pound.
The US dollar index, which pits the dollar against other major peers, gained 0.11% to 98.92.
Before the UK-EU trade talks for March 2, investors worry the negotiations won’t go smoothly. The anxiety comes in light of the harsh rhetoric between the two sides.
EU chief negotiator Michel Barnier said the bloc wouldn’t agree a deal “at any price.” He also rebuffed the notion of a Canada-style trade agreement with the UK.
The British pound slipped 0.71% against the dollar at $1.2912. Meanwhile, the euro gained 0.17% against the dollar at $1.0898.
According to experts, Brexit uncertainty is restricting the pound’s gains.
On the other hand, the fall in Treasury yields has been capping the dollar’s gains. The fall comes amid reports the coronavirus spread worldwide is speeding up. Infections have already risen across Europe, the US, and the Middle East.
Elsewhere, the dollar was flat against the Japanese yen at 110.27.