TORONTO: The Canadian dollar weakened to its lowest level in more than four months against its US counterpart on Monday, as the safe-haven greenback broadly climbed and Chinese factory data added to investor concerns about the global economic outlook.
The loonie was trading 0.3% lower at 1.29 to the greenback, or 77.52 US cents, after touching its weakest level since Dec. 22 at 1.2905.
China’s factory activity contracted at a steeper pace in April as widespread COVID-19 lockdowns halted industrial production and disrupted supply chains, raising fears of a sharp economic slowdown in the second quarter that will weigh on global growth.
Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global economic outlook.
US crude prices were down 3.5% at $101.08 a barrel as gloomier demand prospects overshadowed fears that supply might be crimped by a potential European Union ban on Russian crude.
Meanwhile, the US dollar climbed against a basket of major currencies ahead of the Federal Reserve policy meeting on Tuesday and Wednesday. Markets are pricing in an aggressive run of interest rate hikes from the Fed as it tries to tame soaring inflation.
Speculators have cut their bullish bets on the Canadian dollar, data from the US Commodity Futures Trading Commission showed on Friday. As of April 26, net long positions had fallen to 20,881 contracts from 21,226 in the prior week.
Canadian government bond yields were higher across the curve, tracking the move in US Treasuries. The 10-year rose 2 basis points to 2.892%, approaching the 11-year high notched last month at 2.944%.
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