C$ posts biggest decline in 6 weeks as China outlook weighs

Article content

TORONTO — The Canadian dollar weakened to a one-week low against its U.S. counterpart on Monday, as anti-lockdown protests in China rattled investor nerves and data showed Canada’s current account balance swinging to a deficit.

The loonie was trading 0.8% lower at 1.3485 to the greenback, or 74.16 U.S. cents, its biggest decline since Oct. 14. It touched its weakest intraday level since Nov. 21 at 1.3493.

Article content

Wall Street stocks tumbled and the safe-haven U.S. dollar rose against a basket of major currencies as protests in major Chinese cities against strict COVID-19 policies sparked concerns about economic growth.

Article content

Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to prospects for the global economy.

U.S. crude futures turned positive after falling to close to their lowest levels in a year, as rumors of an OPEC+ production cut offset concerns about China. U.S. crude prices settled 1.3% higher at $77.24 a barrel.

Canada posted a current account deficit of C$11.1 billion ($8.3 billion) in the third quarter after surpluses in the first two quarters of 2022.

“We expect deficits to persist into 2023 as trade and income flows return to more normal patterns,” Shelly Kaushik, an economist at BMO Capital Markets, said in a note.

Canadian gross domestic product data is due on Tuesday and employment data is set for Friday, which could help guide expectations for next week’s Bank of Canada interest rate decision.

Analysts forecast the data to show that the economy expanded at an annualized pace of 1.5% in the third quarter and added 5,000 jobs in November.

Canadian government bond yields rebounded across the curve. The 10-year was up 2.2 basis points at 2.960%, after touching on Friday its lowest intraday level in more than three months at 2.905%. (Reporting by Fergal Smith; Editing by Jonathan Oatis and Nick Zieminski)