Loonie hits a 2-month low as oil prices, risk appetite fall

TORONTO: The Canadian dollar weakened to a two-month low against its US counterpart on Tuesday as investor appetite for risk eased and oil prices decreased.

US stocks opened slightly lower as investors paused after a three-day run driven by hopes that major economies would act to counter a global economic downturn.

Oil prices edged lower on Tuesday on persisting concerns over demand. US crude oil futures were down 1.5% at $55.38 a barrel.

Canada exports many commodities, including oil, so its currency tends to move according to the signal that stocks send about the outlook for the global economy.

At 9:40 a.m. (1340 GMT), the Canadian dollar was trading 0.1% lower at 1.3340 to the greenback, or 74.96 US cents. The currency touched its weakest intraday level since June 19 at 1.3346.

The fall for the loonie came as Canadian factory sales decreased by 1.2% in June from May on lower petroleum and coal product sales, domestic data showed, although it was less than forecast. Analysts surveyed by Reuters had forecast a 1.7% decrease.

Canadian government bond prices were higher across the yield curve in sympathy with US Treasuries. The two-year rose 7 Canadian cents to yield 1.322% and the benchmark 10-year was up 58 Canadian cents to yield 1.128%.