Loonie losses continue as trade tensions escalate
August 8, 2019
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The Canadian dollar extended its losses, falling to a near seven-week low against its U.S. counterpart this week as escalating global trade tensions worried investors.
A year-long U.S.-China trade war has boiled over as Washington accused Beijing this week of manipulating its currency after China let the yuan drop to its lowest point in more than a decade, according to Reuters.
With Canada being a large commodity exporter – including oil – its economy is especially vulnerable to any escalation of trade tensions.
The loonie was trading 0.5 per cent lower at 1.3336 to the greenback, or 74.99 U.S. cents on Wednesday. The currency hit its lowest intraday level since June 19 at 1.3344.
Last month, the Bank of Canada highlighted the risks that trade wars pose to the global economy as it left its benchmark interest rate unchanged at 1.75 per cent.
Chances of a Bank of Canada interest rate cut this year have climbed to more than 90 per cent from about 40 per cent after the release of data last week showing the economy strengthened more than expected in June.