The Canadian dollar weakened on Wednesday to a 10-day low against its U.S. counterpart, underperforming other G10 currencies, as the price of oil, one of Canada’s major exports, slumped.
At 3:55 p.m., the Canadian dollar was trading 0.7 per cent lower at 1.3043 to the greenback, or 76.67 U.S. 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.
U.S. crude oil futures settled 2.4 per cent lower as U.S. equity markets broadly fell, even though energy traders worried about shrinking supply from Iran due to U.S. sanctions and also kept an eye on Hurricane Michael, which closed nearly 40 per cent of U.S. Gulf of Mexico oil output.
Stocks tumbled as investors worried that rising U.S. Treasury yields and the escalating U.S.-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 per cent 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 per cent in August from July after a downwardly revised 1.5 per cent 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 U.S. producer prices.
The 10-year rose 14 cents to yield 2.553 per cent. On Friday, the 10-year yield touched its highest in nearly five years at 2.615 per cent.