C$ weakens to six-day low as commodity currencies retreat

Tue Jul 19, 2016 4:37pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar weakened to a nearly one-week low against its U.S. counterpart on Tuesday, tracking losses for fellow commodity currencies as oil prices fell and a recent improvement in risk appetite stalled.

World shares dipped for only the second time in nine days, sapped by the drop in oil prices and by data that showed Britain's vote to quit the European Union has done serious damage to German economic confidence.

"There's definitely a sense of exhaustion in terms of what we've seen coming out of the Brexit (vote)," said Eric Theoret, a currency strategist at Scotiabank.

Officials and policymakers had stoked fears about the economic risks of leaving the economic bloc ahead of the vote, Theoret said, and then had to backtrack when the leave camp won.

"If we look at the sequence, it was fear-mongering, panic, policymakers stepping in to say 'we've got this, we can provide support,' and the market made new all-time highs in terms of equities," he said.

Brexit is expected to dominate a meeting of Group of 20 finance ministers in China this week, a Canadian official said on Monday.

Oil prices fell on Tuesday amid concerns over a global supply glut.

The commodity-linked Australian and New Zealand dollars fell as investors ramped up bets that central banks in Australia and New Zealand could ease monetary policy as early as next month.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch