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Loonie gives back some of last week's rally as oil prices slide

Published 2020-03-30, 03:30 p/m
Updated 2020-03-30, 03:36 p/m
© Reuters.

* Canadian dollar weakens 1.2% against the greenback

* Price of U.S. oil settles down 6.6%

* Loonie trades in a range of 1.4000 to 1.4184

* Canada's 10-year yield rises less than a basis point to 0.744%

By Fergal Smith

TORONTO, March 30 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as the price of oil fell and the greenback climbed against a basket of major currencies, with the loonie giving up some of the previous week's sharp gains.

At 3:11 p.m. (1911 GMT), the Canadian dollar CAD=D4 was trading 1.2% lower at 1.4153 to the greenback, or 70.66 U.S. cents. The currency, which on Friday touched an 11-day high at 1.3922, traded in a range of 1.4000 to 1.4184.

Last week, the loonie rallied 3.1%, its biggest weekly gain since October 2009.

The plunge in oil prices was the "the driving factor" for the Canadian dollar on Monday, said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.

The market is waiting for news of support from Ottawa for the oil and gas industry, Chandler added.

Oil is one of Canada's major exports.

U.S. crude oil futures CLc1 settled down 6.6% at $20.09 a barrel, while the U.S. dollar .DXY snapped a week of declines as investors braced for prolonged uncertainty and governments tightened lockdowns to fight the coronavirus. Canadian government program to help businesses pay wages during the coronavirus outbreak applies to all enterprises and charities with a revenue loss of 30% or more, Prime Minister Justin Trudeau said. Friday, Canada said it would cover 75% of wages for small businesses and the Bank of Canada cut its key interest rate to 0.25%, the lowest level in a decade, as officials sought to limit layoffs and bolster an economy hard hit by the coronavirus pandemic. central bank also launched its first-ever quantitative easing program, saying it would buy government and commercial debt.

Canada's 10-year yield CA10YT=RR was little changed, rising by less than 1 basis point to 0.744%.

Canada's GDP report for January is due on Tuesday.

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