Canadian dollar slumps most in two weeks amid global caution

Mon Jan 4, 2016 4:31pm EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar weakened by the most in more than two weeks against its U.S. counterpart on Monday, hurt by a sharp fall in Chinese shares that weighed on commodity-linked currencies and global stock markets.

The loonie, as Canada's currency is colloquially known, slumped to its lowest level against the Japanese yen CADJPY=R since December 2012 as traders piled into the traditional low-risk currency after disappointing Chinese factory data sparked a selloff.

Chinese factory activity contracted for the 10th month running in December, adding to headwinds for commodity exporters such as Canada.

Canada's manufacturing sector meanwhile contracted for the fifth straight month as activity fell to a record low in December, data showed.

The price of oil, a major Canadian export, fell after an early rally as concern about Middle East tensions gave way to worries about slowing global economic growth. [O/R]

"The year is starting out no different than the way we left it, with a possible domestic rate cut, the potential for underpriced U.S. hikes, and then weak oil," said Darcy Browne, managing director of foreign exchange sales at CIBC Capital Markets.

The Canadian dollar CAD=D4 ended the session trading at C$1.3941 to the greenback, or 71.73 U.S. cents, much weaker than Thursday's close of C$1.3840, or 72.25 U.S. cents.

The currency's traded between C$1.3815 and C$1.3983. It hit its weakest level in more than 11 years on Dec. 18 at C$1.4003.   Continued...