The Canadian dollar slipped to an 11-day low against its U.S. counterpart on Monday as escalation of a trade dispute between the world’s biggest economies weighed on global stock markets and oil prices.
At 4 p.m. EDT (2000 GMT), the Canadian dollar was trading 0.1 percent lower at C$1.2916 to the greenback, or 77.42 U.S. cents. The currency’s strongest level of the session was C$1.2864, while it touched its weakest since March 22 at C$1.2944. “It has been a broad based risk aversion move rather than anything CAD specific,” said Eric Theoret, a currency strategist at Scotiabank.
U.S. stocks plunged as investors fled technology shares amid resurging trade worries, sending the S&P 500 and the Dow Jones Industrial Average below their 200-day moving averages for the first time since the Brexit vote in June 2016. China has increased tariffs by up to 25 percent on 128 U.S. products in response to U.S. duties on imports of aluminum and steel. A global trade war could hurt Canada’s commodity-linked economy.
The price of oil, one of Canada’s major exports, was pressured by a rise in Russian production, expectations that Saudi Arabia will cut prices of the crude it sends to Asia and the deepening U.S.-China trade spat. U.S. crude oil futures settled nearly 3 percent lower at $63.01 a barrel.
The pace of growth in the Canadian manufacturing sector firmed in March, data showed. The Markit Canada Manufacturing Purchasing Managers’ index, a measure of manufacturing business conditions, increased to a seasonally adjusted 55.7 last month from 55.6 in February.
Canadian government bond prices were lower across the yield curve, with the two-year down 1.2 Canadian cents to yield 1.784 percent and the 10-year falling 19 Canadian cents to yield 2.116 percent. On Thursday, the 10-year yield touched its lowest intraday since Jan. 4 at 2.073 percent.
Canadian trade data for February is due on Thursday and the March employment report is due on Friday.