C$ falls by most since October as new virus strain clouds outlook

TORONTO: The Canadian dollar tumbled to a near three-week low against its US counterpart on Monday as the spread of a new coronavirus strain in Britain clipped risk appetite, overshadowing progress on a long-awaited US economic stimulus package. Global shares headed lower and the safe-haven US dollar rallied, as the strain, said to be up to 70% more transmissible than the original, threatened to reduce prospects of a vaccine-led recovery in the global economy.

Oil, one of Canada's major exports, was down 4.2% at $47.02 a barrel, while the Canadian dollar fell 0.7% to 1.2879 per greenback, or 77.65 US cents, its biggest decline since Oct. 28. The currency touched its weakest intraday level since Dec. 2 at 1.2955.

Speculators have cut their bearish bets on the Canadian dollar to the lowest in two months, data from the US Commodity Futures Trading Commission showed on Friday. As of Dec. 15, net short positions had fallen to 15,716 contracts from 20,738 in the prior week.

US congressional leaders reached agreement on Sunday on a $900 billion package to provide the first new aid in months to an economy and individuals battered by the surging coronavirus pandemic, with votes likely on Monday.

Canadian wholesale sales in November most likely rose by 1.0% after a similar 1.0% increase in October, Statscan said in a flash estimate on Monday.

Canada's GDP data for October is due on Wednesday.

Canadian government bond yields were lower across a flatter curve in sympathy with US Treasuries. The 10-year fell 5.7 basis points to 0.697%, having touched its lowest intraday level since Dec. 1 at 0.690%.