The Canadian dollar weakened against its U.S. counterpart on Monday as data showing slower economic growth in China weighed on sentiment, overshadowing Prime Minister Justin Trudeau‘s early election call.
Trudeau on Sunday called an election for Sept. 20, betting that high vaccination rates against the coronavirus and a post-pandemic economic rebound will help him prolong and strengthen his grip on power.
“Canada‘s election call should not have surprised even the most casual of Canada watchers as it has been highly anticipated for months,” Derek Holt, head of capital markets economics at
Scotiabank, said in a note. “CAD is largely ignoring it this morning.”
Global shares slid after a raft of Chinese economic indicators showed a surprisingly sharp slowdown in the engine of global growth, just as much of the world races to stem the spread of the Delta variant of COVID-19.
Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global economic outlook.
U.S. crude prices were down nearly 3% at $66.41 a barrel, while the Canadian dollar was trading 0.3% lower at 1.2554 to the greenback, or 79.66 U.S. cents.
Speculators have cut their bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed. As of Aug. 10, net long positions had dipped to 6,465 contracts from 7,460 in the prior week.
Domestic data for June was mixed. Factory sales jumped by 2.1% from May, while wholesale trade fell by 0.8%.
Data from the Canadian Real Estate Association showed home sales falling in July for the fourth straight month, down 3.5% from June.
The Canadian 10-year yield touched its lowest since Aug. 5 at 1.170% before recovering slightly to 1.174%, down 1 basis point on the day.
(Reporting by Fergal Smith; Editing by Emelia Sithole-Matarise)
