(Includes comments from strategists, market data, and price changes.)
* The Canadian currency falls 0.9 percent versus the US dollar, to 1.2494, its lowest level since April 23. * The price of US oil falls 2.4 percent. * The Canadian 10-year yield falls to 1.307 percent, its lowest level in four months.
Fergal Smith contributed to this article.
Reuters, TORONTO, July 6 – On Tuesday, the Canadian dollar plummeted to a two-month low against its generally stronger US equivalent, as oil prices fell and investors evaluated evidence that the global economic recovery was reaching a halt.
The loonie has gained this year from the world economy’s recovery from the coronavirus crisis, as Canada is a significant supplier of commodities, particularly oil.
“When the rate of growth peaks, there is a school of thinking that you sell the recovery trade,” said Adam Button, chief currency analyst at ForexLive. “From Q3 onwards, the rate of growth will slow.”
While oil came down from a multi-year high as OPEC+ producers fought over plans to raise production, an indicator of activity in the US services sector showed moderate expansion in June, down from a record pace in May.
U.S. crude futures fell 2.4 percent to $73.37 a barrel, while the Canadian currency fell 0.9 percent to 1.2456 to the greenback, or 80.28 US cents, its lowest level since February 26. At 1.2494, it hit its lowest level since April 23.
Only the Norwegian crown has fallen more among the G10 currencies. Norway is a big oil producer as well.
The dollar rose against a basket of major currencies ahead of the release of the Federal Reserve’s June meeting minutes on Wednesday. The meeting resulted in the central bank’s unexpected change to more hawkish guidance.
The June jobs data for Canada is due on Friday, and it could provide insight into the Bank of Canada’s policy stance. Some analysts believe the Bank of Canada may reduce bond purchases again when it announces interest rates next week.
Bond rates in Canada declined across a flatter curve, mirroring the trend in US Treasuries. The 10-year yield fell to 1.307 percent, its lowest level since February 24, before recovering somewhat to 1.328 percent, down 7.3 basis points on the day.
(In Toronto, Fergal Smith contributed reporting.)
Alison Williams and Matthew Lewis edited the piece.)/n
