TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as commodities fell after data showed China cut its growth target and Europe’s private sector slowed last month, reigniting concerns about the strength of the global economy.
Riskier assets like stocks were hit after Asian powerhouse China lowered its growth target to 7.5 percent, while euro zone surveys of purchasing managers fell from initial estimates, driving the euro to a two-week low against the dollar.
Oil slipped to around $123 per barrel on Monday after the China data and a boost in Iraqi production.
“The Canadian dollar did weaken off but it’s holding in fairly well,” said Blake Jespersen, managing director of foreign exchange sales at BMO Harris.
“China did downgrade their growth forecast, but 7.5 percent is still pretty good and it assuages some fears of a hard landing that they didn’t downgrade any more than that.”
At 8:50 a.m., the Canadian dollar stood at C$0.9924 versus the U.S. dollar, or $1.0076, down from Friday’s North American close at C$0.9886 versus the U.S. dollar, or $1.0115. It touched a session low at C$0.9960.
Last week the Canadian dollar gained about 1 percent against the greenback, mostly from improved risk sentiment after a huge cash injection by the European Central Bank to stabilize the euro zone’s financial problems, along with solid U.S. labor market data and a generally elevated oil prices.
On Monday, nervousness over whether Greece will complete a bond exchange with private creditors by March 8, to secure a 130 billion euro ($172 billion) bailout deal and avoid a messy debt default, also undermined demand for riskier assets.
The Greek bond offering will be held the same day Bank of Canada Governor Mark Carney makes his next interest rate announcement.
“Having those two big events on Thursday will create a bit of caution in the markets and you may not see much of a range for the Canadian dollar over the next three days,” said Jespersen.
He said the Canadian currency should hover between C$0.9850 on the high end and just below parity with the U.S. at C$1.0020.
Sluggish domestic growth and uncertainty about the global economy will likely keep the Bank of Canada from raising rates until the second quarter of 2013, according to a Reuters survey.
Canadian bond prices were lower across the curve, with the two-year bond down a Canadian cent to yield 1.108 percent. The 10-year bond fell 14 Canadian cents to yield 1.975 percent.
Editing by Chizu Nomiyama