Canadian Dollar Dives by Most in a Month as Economy Sputters

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(Bloomberg) — Canada’s dollar slumped Tuesday by the most in more than a month even as most of its major developed-market peers gained ground against the greenback, weighed down by signs that the domestic economy is wavering. 

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The so-called loonie tumbled in the wake of news that British bank HSBC Holdings Plc plans to sell its Canadian unit to Toronto-based Royal Bank of Canada, a transaction that could potentially spur outflows, while preliminary data for October showed the nation’s economy appears to be stalling out and crude oil prices handed back much of their earlier gains. With month-end drawing near, positioning dynamics could also be playing a role, analysts suggested.

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The Canadian currency weakened as much as 1.1% to C$1.3646 per US dollar, its biggest intraday slide since Oct. 13. The loonie was on track for its third straight day of declines.

Preliminary data show gross domestic product was flat in October, Statistics Canada reported Tuesday, potentially giving the central bank leeway to slow down the pace of rate hikes. The Bank of Canada has already begun slowing down its pace of rate hikes, after increasing the benchmark overnight lending rate to 3.75% from the emergency pandemic low of 0.25% that held until March.

West Texas Intermediate crude oil prices, meanwhile, held below $80 a barrel following an unconfirmed report that OPEC+ will stick with its current oil output policy rather than potentially trimming supply further. While the benchmark was up around 1.3% on the day, it was well below its session peak, having risen as much as 3.1% earlier onm Tuesday.