Canadian dollar weakens to nearly six-week low as oil falls

Wed Sep 14, 2016 9:28am EDT
 
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TORONTO (Reuters) - The Canadian dollar weakened to a nearly six-week low against its U.S. counterpart on Wednesday as oil prices fell and risk appetite remained constrained.

A recent rise in bond yields, triggered in part by deepening worries over the difficulty of the world's major central banks to stimulate growth, kept investors in broadly risk-off mode.

The rise in bond yields weighs on higher-yielding commodity-linked currencies such as the Canadian dollar.

Oil fell despite data from an industry group that showed a smaller-than-expected build in U.S. crude stockpiles. U.S. crude CLc1 prices were down 0.60 percent at $44.63 a barrel.

At 8:51 a.m. EDT (1251 GMT), the Canadian dollar CAD=D4 was trading at C$1.3186 to the greenback, or 75.84 U.S. cents, slightly weaker than Tuesday's close of C$1.3170, or 75.93 U.S. cents.

The strongest level of the session for the currency was C$1.3128, while it touched its weakest since Aug. 5 at C$1.3200.

The reduced potential for global economic growth and resultant lower neutral interest rates could pose risks for financial stability, Bank of Canada Senior Deputy Governor Carolyn Wilkins said.

Wilkins also reiterated the dovish message of last week's statement from the central bank, saying there were downside risks to Canadian inflation due to question marks about exports.

Austrian Chancellor Christian Kern's opposition to a free trade agreement between the European Union and Canada was countered by fervent praise for the deal from his deputy at a special parliamentary session on the matter.   Continued...

 
Canadian Loonies, otherwise known as a one dollar coin, are displayed on top of an American currency in this posed photograph in Toronto, October 10, 2008.      REUTERS/Mark Blinch (CANADA)