March 16, 2020 / 1:34 PM / 4 months ago

CANADA FX DEBT-Loonie weakens as central bank actions fail to stifle virus fears

    * Canadian dollar falls 0.9% against the greenback
    * Loonie trades in a range of 1.3730 to 1.3940
    * Price of U.S. oil decreases by 8.5%
    * Canadian bond yields tumble across the curve

    By Fergal Smith
    TORONTO, March 16 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as measures taken by
global central banks to cushion the economic impact of the
coronavirus outbreak failed to calm financial markets, with
stocks and the price of oil tumbling.
    At 9:06 a.m. (1306 GMT), the Canadian dollar          was
trading 0.9% lower at 1.3932 to the greenback, or 71.78 U.S.
cents. The currency, which hit on Friday hit a four-year low at
1.3996, traded in a range of 1.3730 to 1.3940.
    Stocks globally          and the price of oil, one of
Canada's major exports, continued to nose-dive after the second
emergency cut by  the Federal Reserve in as many weeks -
effectively to zero - and supportive measures from all corners
failed to quell coronavirus fears.             
    U.S. crude oil futures        were down 8.5% at $29.03 a
barrel.
    The Fed's move to slash interest rates could raise
speculation that the Bank of Canada will ease further. Canada's
central bank cut its key policy rate on Friday by 50 basis
points in an emergency move to leave it at 0.75%.             
    "It's doubtful the BoC will wait until their next policy
meeting in April to slash rates a final 50 bps," Benjamin
Reitzes, a Canadian rates & macro strategist at BMO Capital
Markets, said in a research note.
    Canadian Prime Minister Justin Trudeau on Sunday would not
rule out closing borders to combat the coronavirus outbreak,
while the chief medical officer said time was running out to
prevent a spike in cases.             
    Canadian government bond yields fell across the curve in
sympathy with U.S. Treasuries. The 10-year yield             was
down 17.5 basis points at 0.672%.
    Canadian home sales rose 5.9% in February from the previous
month, led by a jump in activity in the Greater Toronto Area,
the Canadian Real Estate Association said.             
    Canadian manufacturing data for January is due on Tuesday
and the February inflation report is set for Wednesday.

 (Reporting by Fergal Smith; Editing By Steve Orlofsky)
  
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