Canadian dollar hits 2-week low as global trade uncertainty lingers

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

TORONTO (Reuters) - The Canadian dollar weakened to its lowest in more than two weeks against its U.S. counterpart on Thursday as optimism faded for a near-term resolution to a trade dispute between the United States and China.

The United States and China are a long way from resolving trade issues, but there is a fair chance the two countries will get to a trade deal, U.S. Commerce Secretary Wilbur Ross said.

Canada exports many commodities, including oil, so its economy could be hurt if the trade dispute drags on.

U.S. crude prices were down 0.1 percent at $52.59 a barrel as concern over the global economy reasserted itself, reversing earlier price gains made on the potential for U.S. sanctions on OPEC member Venezuela.

At 9:41 a.m. EST (1441 GMT), the Canadian dollar was trading 0.1 percent lower at 1.3352 to the greenback, or 74.90 U.S. cents. The currency touched its weakest since Jan. 7 at 1.3375.

The two-week low for the loonie comes after a string of weak domestic data this week prompted some economists to project a November contraction in Canada’s economy.

Chances of another Bank of Canada interest rate hike by the summer have fallen to less than 30 percent from more than 50 percent at the end of last week. The central bank has hiked five times since July 2017.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 5 Canadian cents to yield 1.87 percent and the 10-year climbed 26 Canadian cents to yield 1.940 percent.

Reporting by Fergal Smith; editing by Jonathan Oatis