Canadian Dollar Slumps To 6-Month Low As Risk Aversion Climbs
Canadian dollar weakens 1.2% against the greenback Touches its weakest level since Feb. 5 at 1.2832 Price of U.S. oil settles 2.7% lower Canadian bond yields ease across a flatter curve
The Canadian dollar fell on Thursday for a fourth day against its broadly stronger U.S.
counterpart, as investors worried that global economic growth could slow and that the Federal Reserve was prepared to reduce stimulus.
Stocks globally stumbled, bond yields fell and thesafe-haven U.S. dollar notched a nine-month peak. Oil,
one of Canada’s major exports, dropped to its lowest since May, settling 2.7% lower at $63.69 a barrel.
“A perfect little risk-off storm” has weighed on the loonie, Erik Bregar, head of FX strategy at the Exchange Bank of Canada, said in a note. “We think a new uptrend has firmly begun for USD-CAD and we therefore expect buyers (of U.S. dollars) on the dips.”
Investors worry that circulation of the Delta variant of the coronavirus could slow global economic recovery. In addition, the release on Wednesday of minutes from the Federal Reserve’s July policy meeting showed officials felt the employment benchmark for decreasing support for the economy “could be reached this year.”
The Canadian dollar was trading 1.2% lower at 1.2820 to the greenback, or 78.00 U.S. cents, giving up all of
this year’s gains and extending a string of declines since the start of the week. It touched its weakest intraday level since Feb. 5 at 1.2832. Still, Canadian data for July showed home prices climbing at
a record annual pace and the reopening of the economy giving payroll jobs a boost.
Canada’s retail sales report for June is due on Friday, which could offer further clues on the strength of domestic activity.Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year fell 2.8 basis points to 1.127%.
– Reuters