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Markets

Loonie extends first-quarter decline as virus fears weigh

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to
01 Apr 2020
  • Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the flow of global trade and capital.
  • The Canadian dollar was trading 1.1pc lower at 1.4226 to the greenback, or 70.29 U.S. cents. The currency traded in a range of 1.4065 to 1.4272.

TORONTO: The Canadian dollar weakened against its U.S. counterpart on Wednesday, adding to a sharp first-quarter decline, as the economic threat of the spreading coronavirus pandemic weighed on global financial markets.

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the flow of global trade and capital.

U.S. stock index futures sank as stark predictions of a rise in the U.S. death toll from the virus and worsening economic damage from the coronavirus pandemic led investors to ditch equities for safe-haven assets.

U.S. crude oil futures were down 0.2pc at $20.43 a barrel, trading near their lowest in 18 years, as a report showing a big rise in U.S. inventories and a widening rift within OPEC heightened oversupply concerns.

At 9:11 a.m. (1311 GMT), the Canadian dollar was trading 1.1pc lower at 1.4226 to the greenback, or 70.29 U.S. cents. The currency traded in a range of 1.4065 to 1.4272.

In March, the loonie declined 4.7pc, while it was down 7.6pc for the first quarter.

Canada's death toll from the coronavirus outbreak jumped by 35pc to 89 in less than a day, officials said on Tuesday, and the major province of Quebec said it was running low on key medical equipment.

In an effort to support the economy during the pandemic, theBank of Canada has slashed interest rates to 0.25pc and plans to engage in large-scale asset purchases, quantitative easing, while Ottawa has announced C$95 billion in aid.

Canadian government bond yields fell across a flatter curve, with the 10-year down 8.6 basis points at 0.609pc.

Last month, the 10-year yield hit a record low at 0.233pc.