C$ lags G10 currencies as oil prices tumble

TORONTO: The Canadian dollar weakened on Wednesday to a 10-day low against its US counterpart, underperforming other G10 currencies, as the price of oil, one of Canada's major exports, slumped.

At 3:55 p.m. (1955 GMT), the Canadian dollar was trading 0.7 percent lower at 1.3043 to the greenback, or 76.67 US cents, the biggest decline among a group of heavily traded foreign exchange rates known as the G10 currencies.

The loonie touched its weakest since Sept. 28 at 1.3046.

"I do think today is primarily an oil story and the fact that Canada is a standout in the G10 makes sense because it is the G10 oil currency," said Christian Lawrence, a senior market strategist at Rabobank.

US crude oil futures settled 2.4 percent lower as US equity markets broadly fell, even though energy traders worried about shrinking supply from Iran due to US sanctions and also kept an eye on Hurricane Michael, which closed nearly 40 percent of US Gulf of Mexico oil output.

Stocks tumbled as investors worried that rising US Treasury yields and the escalating US-China trade policy dispute would hurt global growth.

Canada exports many commodities and runs a current account deficit so its economy could suffer if the global flow of trade or capital slows.

The loonie has retreated 2 percent since notching its strongest in more than four months last week at 1.2783 as a deal to revamp the North American Free Trade Agreement reduced uncertainty for Canada's economy.

The value of Canadian building permits increased by 0.4 percent in August from July after a downwardly revised 1.5 percent drop in the prior month, Statistics Canada said.

Canadian government bond prices were higher across a steeper yield curve as a safe-haven bid offset data showing higher US producer prices.

The 10-year rose 14 Canadian cents to yield 2.553 percent. On Friday, the 10-year yield touched its highest in nearly five years at 2.615 percent.