TORONTO: The Canadian dollar on Friday posted its biggest decline in more than three months against its US counterpart as news of a new, possibly vaccine-resistant coronavirus variant spooked global financial markets.
Global stocks and oil, one of Canada’s major exports, tumbled as investors worried that the variant could dampen economic growth.
Scientists say the variant, detected in South Africa, Botswana and Hong Kong, has an unusual combination of mutations, may be able to evade immune responses and could be more transmissible.
“Canada is falling in conjunction with the rest of the commodity complex,” said Michael Goshko, corporate risk manager at Western Union Business Solutions.
“That’s a move on ‘shoot first and ask questions later’, together with thin markets.”
Market participants noted the drop on Wall Street was likely exaggerated by the thin volume during the shortened post-Thanksgiving holiday session.
US crude prices settled down 13.1% at $68.15 a barrel, while the Canadian dollar was trading 0.9% lower at 1.2760 to the greenback, or 78.37 US cents, its biggest decline since Aug. 19.
It touched its weakest intraday level since Sept. 22 at 1.2799.
For the week, the currency was down 1%, its sixth straight weekly decline. That’s the longest losing streak since August 2019.
The amount of tightening expected by the Bank of Canada next year fell by about 16 basis points to 122 basis points, money market data showed, while Canadian government bond yields tumbled across the curve, tracking the move in US Treasuries.
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