At 9:51 a.m. (1351 GMT), the Canadian dollar was trading 0.6pc lower at 1.3304 to the greenback, or 75.17 US cents. The currency touched its weakest intraday level since last Wednesday at 1.3316.

US stocks fell as a closely watched bond market indicator pointed to a renewed risk of recession, undoing gains from the previous session due to a retreat by Washington on its latest tariffs on Chinese goods.

Canada exports many commodities, including oil, so its economy could be hurt by a slowdown in the global economy.

Oil prices fell on weak economic data from China and Europe and a rise in US crude inventories. US crude prices were down 3.56pc at $55.03 a barrel.

China reported weaker-than-expected economic data for July, including a surprise drop in industrial output growth to a more than 17-year low, while a slump in exports sent Germany's economy into reverse in the second quarter.

Canadian government bond prices were higher across a flatter yield curve in sympathy with US Treasuries.

The two-year rose 9.5 Canadian cents to yield 1.334pc and the 10-year climbed 84 Canadian cents to yield 1.156pc.

The 10-year yield fell 3.8 basis points further below the 2-year yield to a spread of -17.8 basis points, the curve's

largest inversion since June 2000. An inverted curve is seen by some investors as a harbinger of recession.