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Canadian dollar hits six-week low as Wall Street tumbles

Fergal Smith
·2 mins read
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar fell to a near six-week low against its broadly stronger U.S. counterpart on Monday, as oil prices declined more than 4% and rising coronavirus infections weighed on investor sentiment.

The loonie <CAD=> was trading 0.8% lower at 1.3310 to the greenback, or 75.13 U.S. cents. The currency touched its weakest intraday level since Aug. 12 at 1.3320.

"The USD has caught a risk-off, safe-haven bid due to the turbulence in the equity markets," said Tony Valente, a senior FX dealer at AscendantFX. "It seems that equity markets haven’t finished their September correction yet."

Wall Street's main indexes slid to seven-week lows as renewed lockdown measures in some countries due to the spread of the virus cast doubt over economic recovery.

The sell-off in oil, one of Canada's major exports, intensified pressure on the loonie, Valente said.

U.S. crude oil futures <CLc1> settled 4.4% lower at $39.31 a barrel as rising coronavirus cases stoked worries about global demand, while a potential return of Libyan production bolstered oversupply fears.

Canada has also seen a rise in coronavirus infections. On Saturday, Ontario, the country's most-populous province, cracked down on private social gatherings.

Canadian new house prices rose 2.1% year-over-year in August, which was the largest increase since March 2018, Statistics Canada said on Monday.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year <CA10YT=RR> fell 2.9 basis points to 0.552%.

Canadian Prime Minister Justin Trudeau is scheduled to unveil on Wednesday what he says is a far-reaching plan to help Canada recover from the coronavirus pandemic.

(Reporting by Fergal Smith; Editing by Will Dunham and Peter Cooney)