The Canadian dollar CADUSD weakened against its U.S. counterpart on Wednesday, with the currency pulling back from an earlier six-month high as the boost to investor sentiment from China’s stimulus package lost some momentum.
The loonie was trading 0.3 per cent lower at 1.3470 to the U.S. dollar, or 74.24 U.S. cents, after touching its strongest intraday level since March 8 at 1.3420.
“We’re pulling back today because Chinese stocks cooled down a bit overnight and because EUR-USD collapsed this morning following the better-than-expected U.S. new home sales numbers,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
“Both factors have unleashed broad USD buying, which is pressuring the Canadian dollar.”
Stocks globally pulled back from the record high they posted on Tuesday when China’s central bank unveiled its biggest stimulus since the pandemic.
Mainland Chinese blue chips ended up 1.5 per cent but gave back some of their earlier gains, while the price of U.S. oil, one of Canada’s major exports, fell 2.5 per cent to $69.73 a barrel.
The U.S. dollar rallied against a basket of major currencies, including the euro, as data showed sales of new U.S. single-family homes fell less than expected in August.
Canadian Prime Minister Justin Trudeau looked set to survive a vote of confidence later on Wednesday after his main political rival appeared to fail to muster enough support to end nine years of Liberal Party rule. The vote was due at about 3:30 pm ET (1930 GMT).
Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 3.8 basis points at 2.997 per cent, after earlier touching its highest level since Sept. 9 at 3.013 per cent.