C$ slips to a six-day low amid global growth worries

TORONTO: The Canadian dollar weakened to a six-day low against its U.S. counterpart on Monday, reducing gains since the start of the year after data showing a drop in Chinese imports and exports raised fears of a slowdown in the global economy.

Chinese exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world's second largest economy in 2019 and deteriorating global demand.

Canada is running a current account deficit and exports many commodities, including oil, so its economy could be hurt if the global economy slows.

U.S. crude prices were down 1.1 percent at $51.05 a barrel, while stocks also lost ground.

At 9:13 a.m. EST (1413 GMT), the Canadian dollar  traded 0.1 percent lower at 1.3274 to the greenback, or 75.34 U.S. cents. The currency touched its weakest since Jan. 8 at 1.3297.

Still, the loonie has rallied 1.4 percent since the beginning of 2019 after falling 7.8 percent last year.

The Canadian dollar is expected to rally further in 2019, recovering some of last year's decline, as the Bank of Canada surprises speculators who are betting it has already finished raising interest rates, a Reuters poll showed.

Last week, the Bank of Canada held rates steady as expected but said more rate increases would be necessary, even though low oil prices and a weak housing market will harm the economy in the short term.

Canadian home prices fell in December for the third consecutive month, data on Monday showed. The Teranet-National Bank Composite House Price Index was off 0.3 percent last month from November.

Canada's inflation report for December is due on Friday.

Canadian government bond prices were higher across a flatter yield curve, with the two-year up 3 Canadian cents to yield 1.876 percent, and the 10-year rising 21 Canadian cents to yield 1.934 percent.