Canadian dollar slides to 1-week low as oil falls 5%

TORONTO — The commodity-linked Canadian

dollar weakened to a one-week low against its U.S. counterpart

on Thursday as oil prices fell and data showed the U.S. economy

suffered its steepest contraction since the Great Depression in

the second quarter.

Canada sends about 75% of its exports to the United States,

including oil. U.S. crude prices were down 5% at $39.19 a

barrel, as surging coronavirus infections around the world

threatened to jeopardize a recovery in fuel demand just as major

oil producers are set to raise output.

A stalemate on U.S. fiscal support added to investor

worries, with shares globally falling just one day

after the Federal Reserve’s pledge to use all its tools to

support the U.S. economy.

U.S. gross domestic product collapsed at a 32.9% annualized

rate last quarter as business activity came to an abrupt halt

due to efforts to slow the virus outbreak.

The Canadian dollar was trading 0.8% lower at 1.3445

to the greenback, or 74.38 U.S. cents. The currency touched its

weakest intraday level since July 22 at 1.3453.

Easing of COVID-19 restrictions not yet reflected in May

payroll employment, with the number of Canadians receiving pay

from their employer falling by 4.1%, data from Statistics Canada

showed.

Canada’s GDP report for May is due on Friday. It is expected

to show some recovery in the economy after a sharp contraction

in April.

Canadian government bond yields were lower across the curve

in sympathy with U.S. Treasuries on Thursday. The 10-year

was down 1.5 basis points at 0.464%, having touched

its lowest intraday level since May 15 at 0.453%.

(Reporting by Fergal Smith

Editing by Alistair Bell)

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