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The Canadian dollar CADUSD weakened to a four-week low against its U.S. counterpart on Tuesday as worries about the global banking sector resurfaced, driving a flight to quality.

The loonie was trading 0.7% lower at 1.3640 to the greenback, or 73.31 U.S. cents, after touching its weakest since March 28 at 1.3647.

“It has been a risk-off issue right from the get-go,” said George Davis, chief technical strategist at RBC Capital Markets. “The equity market weakness has resulted in broad-based USD strength which has taken USD-CAD along for the ride.”

U.S. stocks fell and the safe-haven U.S. dollar rallied against a basket of major currencies as First Republic Bank disclosed it lost more than half its deposits during last month’s banking crisis.

“It’s bringing the banking fears back to front of mind for markets,” said Jay Zhao-Murray, a market analyst at Monex Canada Inc. “The bulk of the cyclical and riskier currencies have been down and that includes the Canadian dollar.”

Canada is a major producer of commodities, including oil, so the currency tends to be sensitive to shifts in risk sentiment. Oil settled 2.2% lower at $77.07 a barrel.

Meanwhile, investors are awaiting the release on Wednesday of the Bank of Canada’s monetary policy deliberations for the April 12 interest rate decision. The central bank left its benchmark rate on hold for a second straight meeting at a 15-year high of 4.50%.

Canadian government bond yields were lower across the curve, tracking moves in U.S. Treasuries. The 10-year touched its lowest since April 6 at 2.774% before recovering slightly to 2.798%, down 11.2 basis points on the day.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 9:11am EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
-0.04%0.73676

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