TORONTO: The Canadian dollar weakened to its lowest level in 11 days against its U.S. counterpart on Monday as rising COVID-19 cases in China weighed on investor sentiment and ahead of domestic retail sales data this week.
World stocks fell and the safe-haven U.S. dollar rose against a basket of major currencies as fresh COVID-19 curbs in China fueled worries over the global economic outlook.
Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the outlook for the global economy.
U.S. crude prices fell 1.9% to $78.59 a barrel, while the Canadian dollar was trading 0.3% lower at 1.3430 to the greenback, or 74.46 U.S. cents. The currency touched its weakest intraday level since Nov. 10 at 1.3443.
Still, speculators have cut their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Nov. 15, net short positions had fallen to 12,920 contracts from 18,464 in the prior week.
Canadian retail sales data for September, due on Tuesday, could offer clues on the strength of the domestic economy.
Also on Tuesday, Bank of Canada Senior Deputy Governor Carolyn Rogers is set to speak on financial system stability.
Canadian government bond yields were lower across a more deeply inverted curve.
The 10-year eased 3.9 basis points to 3.086%, while it fell nearly one basis point further below the 2-year rate to a gap of roughly 86 basis points. That was its largest in Refinitiv data going back to 1994.
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