Canadian dollar slips to six-day low on Chinese growth concerns

TORONTO (Reuters) - The Canadian dollar weakened to a six-day low against its U.S. counterpart on Monday, reducing gains since the start of the year as oil prices fell and weak Chinese trade data raised concerns about prospects for the global economy.

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

Chinese exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world’s second largest economy in 2019 and deteriorating global demand.

“If Chinese growth is slowing as fast as it appears then the path is lower for the Canadian dollar,” said Adam Button, chief currency analyst at ForexLive.

Canada is running a current account deficit and exports many commodities, including oil, so its economy could be hurt if the global economy slows.

U.S. crude oil futures CLc1 settled 2.1 percent lower at $50.51 a barrel, taking a pause after a recent rally, while stocks also lost ground.

At 3:41 p.m. EST (2041 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent lower at 1.3273 to the greenback, or 75.34 U.S. cents.

The currency, which has rebounded 1.5 percent since the beginning of 2019 after falling 7.8 percent last year, touched its weakest intraday level since Jan. 8 at 1.3297.

“You can’t get a sustained rally in the Canadian dollar until you get stability in housing,” Button said.

Canadian home prices fell in December for the third consecutive month, data showed. The Teranet-National Bank Composite House Price Index was off 0.3 percent last month from November.

Canada’s inflation report for December is due on Friday.

Canadian government bond prices were mixed across the yield curve, with the two-year CA2YT=RR up 1 Canadian cent to yield 1.886 percent and the 10-year CA10YT=RR falling 5 Canadian cents to yield 1.965 percent.

Reporting by Fergal Smith; editing by Grant McCool