Canadian dollar weakens as China stimulus underwhelms
Story by Reuters • 7h ago
By Fergal Smith
TORONTO (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Tuesday, giving back some recent gains, as investors worried that a slowdown in China could weigh on the global economy, reducing the demand for commodities.
The loonie was trading 0.2% lower at 1.3230 to the greenback, or 75.59 U.S. cents, after trading in a range of 1.3206 to 1.3269. On Friday, it touched a nine-month high at 1.3176.
The market’s appetite for risk has been dialed back, said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.
“If China is having problems … that could signal problems in other parts of the globe,” Richardson said.
Canada is a major producer of commodities, including oil.
U.S. crude oil futures settled 1.8% lower at $70.50 a barrel, pressured by forecasts for slower oil demand growth in China and disappointment with the size of cuts in China’s key lending rates.
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Wall Street’s main indexes also fell, with investors wary of making big bets ahead of remarks by Federal Reserve Chairman Jerome Powell before U.S. Congress on Wednesday and Thursday.
Also on Wednesday, the Bank of Canada will release minutes for its policy decision two weeks ago. The BoC hiked its benchmark rate for the first time since January in an effort to slow the economy and lower inflation to a target of 2%.
Canada’s national statistics agency on Tuesday revealed new weights for the basket of goods and services in its Consumer Price Index, giving more prominence to changes in the prices of food and gasoline.
Canadian government bond yields fell across the curve, tracking moves in U.S. Treasuries. The 10-year was down 6.4 basis points at 3.341%.
Source: MSN
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