The Canadian dollar weakened on Thursday to a one-week low against its U.S. counterpart, tracking losses for other commodity-driven currencies even as oil prices climbed.
Losses for currencies such as the Canadian and Australian dollars came as a rare flurry of disappointing data from China suggested the world’s second-largest economy is finally starting to lose some momentum as borrowing costs rise.
China is a major buyer of commodities produced by countries such as Canada and Australia.
U.S. crude prices were up 1.44 per cent at $50.01 a barrel, building on recent gains after forecasts for stronger oil demand by the International Energy Agency.
Oil is one of Canada’s major exports.
At 9:33 a.m. ET (1333 GMT), the Canadian dollar was trading at $1.2210 to the greenback, or 81.90 U.S. cents, down 0.3 per cent.
Still, the loonie has rallied 13 per cent against the greenback since early May, boosted by a rapid expansion this year in the Canadian economy that prompted the Bank of Canada to raise interest rates in July, its first hike in nearly seven years, and again last week.
The central bank’s policy rate sits at 1 per cent.
The currency’s strongest level of the session was $1.2160, while it touched its weakest since Sept. 7 at $1.2240 after data showing firmer U.S. inflation briefly boosted the U.S. dollar.
Canadian new home prices rose 0.4 per cent in July from June, slightly exceeding economists’ forecasts for a gain of 0.3 per cent. Vancouver saw strong demand from buyers, while prices in Toronto were unchanged for a second straight month following provincial measures to rein in the market, data from Statistics Canada showed.
Canadian government bond prices were lower across a flatter yield curve, with the two-year down 2.5 Canadian cents to yield 1.581 per cent and the 10-year dipping 2 Canadian cents to yield 2.071 per cent.
The 10-year yield touched its highest intraday since October 2014 at 2.105 per cent.