CAD was weighed down by lower oil prices, as investors dumped commodity-based currencies amid fears of the Coronavirus. Concerns about the impact of the virus on travel, tourism and the broader global economy have also been voiced.
Spread of the Deadly Coronavirus Sends the CAD Tumbling Alongside Other Commodity-Linked Currencies
The Canadian Dollar is not the only currency to suffer losses from the outbreak. Both the Australian and New Zealand Dollars saw their rates fall as pressure increased. The US also saw its crude oil prices fall to their lowest in three-months at $52.52 per barrel as worries for a global economic slowdown could be in sight if the virus continues its contagious path. Oil prices have lost 13% of their value since the news broke headlines last week. With the death toll rising to 81 at the time of writing, with a further 2,800 individuals infected, it looks like there is much more to come for the commodity-linked currencies like CAD.
Recent Downtrend for the Canadian Dollar Hasn’t Helped the Currency Stay Afloat
The Canadian dollar has been on a collision course with a downtrend since the Bank of Canada (BoC) took an unexpected dovish turn last week despite leaving its benchmark steady at 1.75% as expected. The turn came when BoC governors highlighted that a future cut was possible if the recent slowdown in domestic growth persisted. Meanwhile in the debt market, the Canadian government debt yields were lower across the maturity curve, with the two-year down at 1.438% versus the 1.486% witnessed on Friday. Benchmark 10-year yields were also lower at 1.303% from Friday’s 1.362%.
GBP Holds Strong Against Cad but Eagerly Awaits Its BoE Decision
The tough times for the Canadian Dollar have been capitalised on by GBP after last weeks performance in the economic data releases. GBP gained from these positive figures and could be on course for a post-election rebound if the Bank of England votes to hold the interest rate this Thursday. Investors in GBP will hope this is the case as the GBP is set to rise as investors will flock back to the currency as optimism grows.
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