Canadian Dollar Hits 1-Week Low As Delta Variant Hits Sentiment

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The Canadian dollar weakened on
Tuesday for a second day against its broadly stronger U.S.
counterpart as new coronavirus outbreaks in Asia pressured
commodity-linked currencies and investors awaited key economic
data later in the week.
The loonie        was trading 0.5% lower at 1.2395 to the
greenback, or 80.88 U.S. cents, after ending Monday’s session
down 0.3%. It touched its weakest intraday level since last
Tuesday at 1.2398.
“The spread of the Delta variant in less-vaccinated
countries is hurting expectations for travel and trade,” said
Karl Schamotta, chief market strategist at Cambridge Global
Payments.
It is “crushing global risk sentiment and weighing on the
commodity complex,” Schamotta added.
Oil        reversed earlier losses, settling 7 cents higher
at $72.98 a barrel, but copper        , seen as a gauge of
global financial health, fell for a fourth day. Canada is a
major producer of both commodities.
The Australian and New Zealand dollars             , which
are also sensitive to commodity markets, fell even more than the
loonie, while the safe-haven U.S. dollar climbed against a
basket of major currencies.
Canadian GDP data for April is due on Wednesday and the U.S.
nonfarm payroll report on Friday.
An upside surprise for the U.S. data has the potential to
boost bond yields and the U.S. dollar, said Schamotta.
Investors could be more sensitive than usual to the U.S.
jobs data, after the Federal Reserve shifted this month to more
hawkish guidance.
Canadian government bond yields were mixed across the curve,
with the 10-year             up less than one basis point at
1.424%.

– Reuters

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