TORONTO (Reuters) - The Canadian dollar fell to a more than one-week low against a broadly weaker U.S. counterpart on Tuesday as oil prices slipped and bond yields fell.
The loonie, as the Canadian currency is colloquially known, also lost ground versus a string of other currencies as oil, a major Canadian export, hit an 11-day low and a snap British election added to geopolitical jitters from North Korea to France.
“We’ve seen the Canadian dollar get slaughtered today,” said Rahim Madhavji, president of KnightsbridgeFX.com, attributing some of the sharp move to a more somber reassessment of how quickly the Bank of Canada might move to raise rates.
“It’s a surprising move, larger than what most people would expect, but it’s really just correcting itself to where we were two weeks ago,” he said.
The Canadian dollar CAD=D4 settled at C$1.3381 to the greenback, or 74.73 U.S. cents, weaker than the Bank of Canada’s official close on Monday of C$1.3316, or 75.09 U.S. cents.
That weakness came even as the greenback hit a nearly three-week low against a basket of major currencies.
The loonie fell sharply against the British pound, which was at its strongest levels in months after British Prime Minister Theresa May surprised markets by calling an early election for June 8, and was also much weaker against the euro, Swiss franc and Japanese yen.
In a speech that did not discuss monetary policy, a senior Bank of Canada official said new technologies could help boost Canada’s flagging productivity and income growth, but could also widen income inequality as some workers benefit from automation and others are hurt by it.
French voters will go to the polls on Sunday in a first round that appears to be a tight four-way race led by a centrist and a far-right candidate.
Investors are also nervous about tensions over North Korea, which failed to launch a ballistic missile over the weekend.
Canadian government bond prices were higher across a flatter maturity curve, with the two-year CA2YT=RR price up half a Canadian cent to yield 0.729 percent and the benchmark 10-year CA10YT=RR rising 69 Canadian cents to yield 1.478 percent.
That was the 10-year’s lowest yield since November.
Oil prices fell, as bearish positions were fueled by a U.S. government report which said shale oil output in May was expected to post the biggest monthly increase in more than two years.
Reporting by Alastair Sharp; Editing by Nick Zieminski and Sandra Maler