C$ reverses from 11-day high as worries rise of second infection wave

• Global stocks fell as Germany and South Korea reported a surge in COVID-19 cases after easing lockdowns.

TORONTO: The Canadian dollar weakened against its US counterpart on Monday as the potential for a second wave of coronavirus infections worried investors, with the loonie retreating from an earlier 11-day high.

Global stocks fell as Germany and South Korea reported a surge in COVID-19 cases after easing lockdowns.

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.

US crude oil futures were up 0.7% at $24.90 a barrel after leading exporter Saudi Arabia said it will reduce output by one million barrels per day on top of reductions agreed under an OPEC+ pact.

The Canadian dollar was trading 0.4% lower at 1.3981 to the greenback, or 71.53 US cents. The currency, which strengthened 1.1% last week, touched its strongest intraday level since April 30 at 1.3901.

Canada said it would create a bridge financing facility for large employers and the expansion of its lending program to middle-sized businesses that need support to get through the economic downturn caused by the coronavirus.

Data on Friday showed that Canada lost a record-breaking 2 million jobs in April.

Speculators have increased their bearish bets on the Canadian dollar to the heaviest since last June, data from the US Commodity Futures Trading Commission showed on Friday. As of May 5, net short positions had increased to 32,052 contracts from 29,044 in the prior week.

Canadian government bond yields were lower across a flatter curve on Monday, with the 10-year yield down 2.4 basis points at 0.559%.