Canadian dollar hits 1-month low as copper prices slide

TORONTO: The Canadian dollar weakened on Tuesday against its US counterpart and all the other G10 currencies, as copper prices fell to seven-week lows and investors awaited guidance from the Federal Reserve on prospects for its bond-buying program.

The loonie was trading 0.4% lower at 1.2193 to the greenback, or 82.01 US cents, the biggest decline among G10 currencies. Earlier in the session, it touched its weakest level since May 13 at 1.2199.

Copper fell 3.6% as traders and funds cut bets on higher prices due to growing nervousness that top consumer China would soon move to curb further price rises.

Canada is a major exporter of commodities, including copper and oil. Oil was up 1.3% at $71.80 a barrel, on optimism that demand will recover rapidly in the second half of this year.

In a new policy statement and economic projections due on Wednesday, the Fed is expected to acknowledge the first conversations among its policymakers about when and how fast to pare back the massive bond-buying program launched last year to help battle the recession triggered by the pandemic.

Canadian housing starts rose 3.2% in May compared with the previous month as multiple urban starts jumped, data from the Canadian Mortgage and Housing Corporation showed.

A preliminary estimate from Statistics Canada showed producer prices in Canada rising by 3.1% in May from April, pushed higher mainly by softwood lumber.

Data on Canadian consumer prices is due on Wednesday, which could offer clues on the Bank of Canada policy outlook.

Canadian government bond yields were little changed across the curve, with the 10-year up half a basis point at 1.392%. On Monday, it touched its lowest intraday level in more than three months at 1.365%.