The Canadian dollar weakened to a six-day low against the greenback and lost ground against other G10 currencies on Thursday, as plunging oil prices overshadowed domestic data showing a stronger-than-expected gain for wholesale trade.
At 3:27 p.m. (1927 GMT), the Canadian dollar was trading 0.3% lower at 1.3478 to the greenback, or 74.19 U.S. cents. The currency touched its weakest intraday level since May 17 at 1.3502.
The price of oil, one of Canada’s major exports, slumped to its lowest since March 13 as global trade tensions dampened the demand outlook. U.S. crude oil futures settled 5.7% lower at $57.91 a barrel, its biggest decline since Dec. 24.
“It is all about oil and the general direction of the U.S. dollar,” said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
The U.S. dollar touched its highest level in two years against a basket of currencies, before reversing lower as investors weighed prospects of the Federal Reserve cutting interest rates.
“If the Fed is going to cut, chances are it is likely to be in response to equity market weakness,” Chandler said.
Stocks on Wall Street and U.S. Treasury yields tumbled as investors worried that a spiralling trade war between the United States and China would shackle global growth.
Canadian government bond prices rallied across the yield curve in sympathy with U.S. Treasuries, with the two-year
price up 16 Canadian cents to yield 1.578% and the 10-year rising 86 Canadian cents to yield 1.624%.
Canadian wholesale trade increased by 1.4% in March from February, Statistics Canada said, beating analysts estimates of a 0.9% increase.