The Canadian dollar weakened against its U.S. counterpart on Monday as data showing slower economic growth in China weighed on investor sentiment, overshadowing Canadian Prime Minister Justin Trudeau’s early election call.
The loonie was trading 0.5% lower at 1.2571 to the greenback, or 79.55 U.S. cents, after touching its weakest level since last Tuesday at 1.2584.
The currency was pressured by “a sharp fall in global growth expectations,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.
Global share markets slid after a raft of Chinese economic indicators showed a surprisingly sharp slowdown in the engine of global growth, just as much of the world races to stem the spread of the Delta variant of the coronavirus.
Canada is a major producer of commodities, including oil and copper, so the loonie tends to be sensitive to global economic prospects. U.S. crude futures settled 1.7% lower at $67.29 a barrel, while copper was down 1.6%.
Trudeau on Sunday called an election for Sept. 20, betting that high vaccination rates against the coronavirus and a post-pandemic economic rebound will help him prolong and strengthen his grip on power.
“Trudeau’s polling margin remains wide, and currency markets see very little daylight between the parties on fiscal and economic policy,” Schamotta said. “The election is something of a nothingburger from an FX perspective.”
Domestic data for June was mixed. Factory sales jumped by 2.1% from May, while wholesale trade fell by 0.8%.
Data from the Canadian Real Estate Association showed home sales falling in July for the fourth straight month, down 3.5% from June.
Canadian government bond yields eased across a flatter curve, tracking the move in U.S. Treasuries. The 10-year
hit its lowest level since Aug. 4 at 1.122% before recovering to 1.154%, down 3 basis points on the day.
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