TORONTO: The Canadian dollar was steady against the US dollar on Tuesday but came within a hairsbreadth of weakening to the key C$1.20 mark as crude prices continued to crumble.
The United Arab Emirates' energy minister stood firm on the Organization of the Petroleum Exporting Countries' (OPEC) decision not to scale back output despite an excess of supply and on OPEC's insistence that other higher-cost producers be the ones to reduce their output.
Oil, a major Canadian export, was approaching $44 a barrel, about 60 percent below the highs of June 2014 and its lowest price in nearly six years.
"It's a one-way ride," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets. "Although (the Canadian dollar is) actually relatively stable this morning ... But ultimately the weakness in oil prices is still directing the moves."
At 9:32 a.m. (1432 GMT), the Canadian dollar was at C$1.1958 to the greenback, or 83.63 US cents, little changed from Monday's finish of C$1.1967, or 83.56 US cents.
The loonie was outperforming most major currencies although at one point during the session it touched as low as C$1.1993, or 83.38 US cents, its weakest level since April 2009. RBC expects the currency to trade between C$1.1940 and C$1.2020 on Tuesday.
Bank of Canada Deputy Governor Tim Lane will speak later in the session about oil prices and their impact on the economy, an event that Chandler said will likely dictate the direction of the Canadian dollar on Tuesday.
Canadian government bond prices were mixed across the maturity curve, with longer-term maturities falling. The two-year bond was down 1.5 Canadian cents to yield 0.929 percent and the benchmark 10-year was off 23 Canadian cents to yield 1.629 percent.
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