TORONTO: The Canadian dollar weakened to a nearly one-week low against its US counterpart on Monday as oil fell and risk appetite deteriorated amid fears that Britain may be on the verge of voting to leave the European Union.
Oil prices fell, weighed down by gloomy economic prospects in Europe and Asia. US crude prices were down 1.39 percent to $48.39 a barrel.
Global stocks sold off, adding to headwinds for the risk-sensitive commodity-linked Canadian dollar, after betting odds showed the probability that Britain would vote to leave the EU had increased sharply to 36 percent, the highest level since the June 23 referendum was announced four months ago.
At 9:26 a.m. EDT (1326 GMT), the Canadian dollar was trading at C$1.2813 to the greenback, or 78.05 US cents, weaker than Friday's close of C$1.2757, or 78.39 US cents.
The currency's strongest level of the session was C$1.2764, while it touched its weakest level since June 7 at C$1.2827.
Last week, the loonie gained 1.4 percent as expectations fell for interest rate hikes from the US Federal Reserve and as oil made fresh 2016 highs above $50 a barrel.
In addition, data on Friday showed that Canada added far more jobs than expected in May as hiring picked up in construction and manufacturing.
Speculators have cut bullish bets on the loonie, Commodity Futures Trading Commission data showed on Friday.
Net long Canadian dollar positions fell to 21,537 contracts in the week ended June 7 from 26,259 contracts in the prior week, which was the largest net long position since February 2013.
Canadian government bond prices were higher across the maturity curve in sympathy with US Treasuries.
The two-year price rose 2 Canadian cents to yield 0.491 percent and the benchmark 10-year climbed 11 Canadian cents to yield 1.12 percent.
The 10-year yield hit its lowest level since Feb. 24 at 1.107 percent.
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