The commodity-linked Canadian dollar weakened to a four-month low against its U.S. counterpart on Monday as worries that the coronavirus outbreak would slow the domestic economy overshadowed stronger-than-expected housing data.
The spreading coronavirus outbreak will hit the Canadian economy, in particular the tourism sector, supply chains and the struggling oil industry, Finance Minister Bill Morneau said.
The price of oil, one of Canada’s major exports, fell on weaker Chinese demand in the wake of the coronavirus outbreak and as traders waited to see if Russia would join other producers in seeking further output cuts. U.S. crude oil futures were down 1.4% at $49.60 a barrel.
At 4:11 p.m. (2111 GMT), the Canadian dollar was trading 0.1% lower at 1.3315 to the greenback, or 75.10 U.S. cents. The currency, which fell 0.5% last week, touched its weakest intraday level since Oct. 10 at 1.3330.
Canadian housing starts rose by 8.8% in January compared with the previous month to 213,224 units as groundbreaking increased on multiple unit urban homes, data from the Canadian Mortgage and Housing Corporation showed on Monday. Economists had expected starts to rise to 205,000.
“January’s positive print is consistent with our forecast calling for residential investment to support overall growth in the first quarter,” Rishi Sondhi, an economist at TD Bank Group, said in a research note.
Separate data, from Statistics Canada, showed that the value of Canadian building permits rose by 7.4% in December from November.
It follows data on Friday showing that Canada added 34,500 jobs in January, more than twice the number markets were expecting, which prompted investors to reduce bets that the Bank of Canada would cut interest rates as soon as next month.
Bank of Canada Governor Stephen Poloz, who is due to step down in June, will speak on Thursday in Melbourne, Australia.
Canadian government bond yields were lower across the yield curve in sympathy with U.S. Treasuries. The 10-year yield fell 2.1 basis points to 1.309%.
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