The commodity-linked Canadian dollar weakened against its US counterpart on Monday after data showed a slowdown in China's economy and the International Monetary Fund cut its world economic growth forecasts. At 9:40 a.m. (1440 GMT), the Canadian dollar was trading 0.3 percent lower at 1.3307 to the greenback, or 75.15 US cents, which matched declines for the Australian dollar and the New Zealand dollar as the biggest among G10 currencies.
The loonie, which hit a nine-day low last Thursday at 1.3319, traded in a range of 1.3257 to 1.3318. The decline for the loonie comes after data on Friday showed a pick-up in December in Canada's annual inflation rate but stable underlying price pressures that could forestall additional interest rate hikes from the Bank of Canada over the coming months. Canadian government bond prices were higher across a flatter yield curve, with the two-year up 1.5 Canadian cents to yield 1.938 percent and the 10-year rising 16 Canadian cents to yield 2.018 percent.
On Friday, the 10-year yield touched its highest intraday in one month at 2.049 percent. China's economic growth cooled slightly in the fourth quarter from a year earlier as expected, weighed down by weak investment and faltering consumer confidence as Washington piled on trade pressure, leaving 2018 growth the weakest in 28 years.
The IMF predicted the global economy to grow at 3.5 percent in 2019 and 3.6 percent in 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilize a slowing global economy.
Canada exports many commodities, including oil, so its economy could be hurt by a slowdown in the global economy. US crude oil futures prices were up 0.5 percent at $54.05 a barrel but the rally in global equities stalled. US markets were closed for the Martin Luther King Jr. Day holiday. Canadian manufacturing and wholesale trade data for November are due on Tuesday. The November retail sales report is due on Wednesday.
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