TEMPO.CO, Toronto – The Canadian dollar (also known as Loonie) lost ground against its broadly stronger U.S. counterpart on Thursday as geopolitical tensions and weak manufacturing data globally weighed on investor sentiment.
The loonie was trading 0.3% lower at 1.3850 to the U.S. dollar, or 72.20 U.S. cents, moving back in reach of the near nine-month low it posted on Monday at 1.3864.
“The moves in USD-CAD today are coming from the broad USD strength, with the general risk off tone in markets exacerbated by the headlines in the Middle East and U.S. data downside misses,” said Jayati Bharadwaj, a global FX strategist at TD Securities.
Manufacturers across the United States, Europe and Asia turned in a weak performance last month as factories grappled with tepid demand, surveys showed, raising the risk of an underpowered global economic recovery.
Canadian factory data was also downbeat. The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 47.8 in July from 49.3 in June, posting its lowest level since December.
Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the outlook for the global economy.
The price of oil was trading 1% lower at $77.12 a barrel as producer group OPEC+’s decision to keep its output policy unchanged offset the threat of a wider Middle East conflict.
Canadian government bond yields moved lower across the curve, tracking a sharp decline in U.S. Treasury yields. The 10-year was down 3.8 basis points at 3.124%, after earlier touching its lowest level since Dec. 29 at 3.110%.
REUTERS
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