Reported By: Fergal Smith, Reuters
TORONTO (Reuters) – The Canadian dollar weakened against the greenback on Tuesday but stuck to its recent trading range as investors awaited more details on the economic impact of the coronavirus crisis.
The Canadian dollar was trading 0.3% lower at 1.4039 to the greenback, or 71.23 U.S. cents. Together with losses on Monday, the loonie has given back all of last week’s 1% advance.
The loonie is trading “with little directionality” for now, said Bipan Rai, North America head, FX strategy at CIBC Capital Markets. “That should change once we get a better feel for how Q2 (second quarter) data is shaping up.”
“We’re still expecting price action to remain contained within the 1.38-1.43 range,” Rai said.
A collapse this year in oil prices has worsened the impact of the coronavirus crisis on Canada’s commodity-linked economy, with the central bank projecting a contraction in output by as much as 30% in the second quarter from its level at the end of 2019.
Newly appointed Bank of Canada Governor Tiff Macklem projected a halting economic recovery during an exclusive interview conducted before he was named, suggesting he will continue the central bank’s loose monetary policy approach.
The decline for the loonie came as leading U.S. infectious disease expert Anthony Fauci warned Congress that a premature opening of the nation’s economy could lead to additional outbreaks of the novel coronavirus, pressuring shares on Wall Street.
Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be particularly sensitive to the global flow of trade and capital.
U.S. crude oil futures were up 7.2% at $25.88 a barrel, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain a supply glut built up during the crisis.
The Canadian coronavirus death toll passed the 5,000 mark and Prime Minister Justin Trudeau said major reforms were needed to seniors’ residences, where more than 80% of the victims lived. Ottawa is rolling out about C$300 billion in fiscal measures to support Canada’s economy.
Canadian government bond yields were mixed across a flatter curve, with the 10-year down 2.8 basis points at 0.563%.
(Reporting by Fergal Smith; Editing by Grant McCool and Andrea Ricci)
Feature Image Credits: FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch
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