(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar weakens 0.2% against the greenback
* Loonie touches a five-week high intraday at 1.3095
* Price of U.S. oil increases nearly 2%
* Canadian bond yields ease across a flatter curve
By Fergal Smith
TORONTO, Oct 13 (Reuters) – The Canadian dollar weakened
against its U.S. counterpart on Tuesday after a high-profile
COVID-19 vaccine trial was paused, crimping risk appetite, with
the currency pulling back from an earlier five-week high.
The loonie was trading 0.2% lower at 1.3143 to the
greenback, or 76.09 U.S. cents. The currency touched its
strongest intraday level since Sept. 8 at 1.3095.
“I don’t think there is anything CAD specific about the
move,” said Alvise Marino, a foreign exchange strategist at
Credit Suisse in New York. “It is in line with the broader price
action in risky assets.”
The Dow and the S&P 500 fell after a four-day winning
streak, pressured by news that Johnson & Johnson had
paused its COVID-19 vaccine candidate clinical trials because of
an unexplained illness in a study participant.
Canada runs a current account deficit and is a major
exporter of commodities, including oil, so the currency tends to
be sensitive to the signal equity markets send about the outlook
for the global economy.
Oil was supported by robust economic data from China, but
gains were capped by forecasts for a slow recovery in global oil
demand as coronavirus cases rise. U.S. crude oil futures
settled nearly 2% higher at $40.20 a barrel.
Despite Tuesday’s setback, the loonie was up 1.3% since the
start of October.
Financial markets moving “to price out U.S. election
uncertainty” has been supportive this month of cyclical
currencies, such as the loonie, Marino said. “Today, we are
seeing a pause in the trend.”
Canadian government bond yields eased across a flatter curve
in sympathy with U.S. Treasuries on Tuesday, as Canada’s market
reopened following the Thanksgiving Day holiday.
The 10-year fell 4.3 basis points to 0.586%,
pulling back from its highest since Sept. 1 at 0.646% earlier in
(Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
(([email protected]; +1 647 480 7446;))
Keywords: CANADA FOREX/ (UPDATE 1)
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