Canadian dollar dips as Omicron variant concerns offset GDP gain

The Canadian dollar weakened against its U.S. counterpart on Tuesday as fears that the Omicron coronavirus variant could impede global economic recovery offset data showing stronger than expected growth in the domestic economy.

World share markets dropped after the CEO of drugmaker Moderna warned that COVID-19 vaccines are unlikely to be as effective against the new variant.

Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to prospects for global growth.

U.S. crude oil futures fell nearly 4 per cent to $67.23, while the Canadian dollar was trading 0.2 per cent lower at 1.2767 to the greenback, or 78.33 U.S. cents.

The currency touched its weakest intraday level since Sept. 22 at 1.2812.

Canada’s economy grew 5.4 per cent in the third quarter on an annualized basis, beating analyst expectations for a gain of 3.0 per cent, Statistics Canada data showed.

A preliminary estimate for October showed a gain of 0.8 per cent, while September’s GDP was in line with expectations for a 0.1 per cent rise.

Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries.

The 10-year rate hit its lowest intraday level since Oct. 14 at 1.534 per cent before recovering slightly to 1.546 per cent, down 6.8 basis points on the day.

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