The Canadian dollar CADUSD edged lower against its U.S. counterpart on Tuesday and posted larger declines against some other major currencies as political uncertainty in South Korea rattled investor sentiment.
The loonie weakened 0.1 per cent to 1.4060 per U.S. dollar, or 71.12 U.S. cents, after moving in a range of 1.4011 to 1.4075.
It was the only G10 currency to lose ground against the greenback as the euro clawed back some of Monday’s sharp decline, which was driven by political turmoil in France.
“We are seeing some broad-based CAD weakness on the crosses today,” said George Davis, chief technical strategist at RBC Capital Markets. “Weaker U.S. equities amidst news of martial law in South Korea has dented risk sentiment a bit, which is also a negative factor at the moment.” The Korean won plunged against the U.S. dollar after South Korea’s president declared martial law in an unannounced late-night address on television.
Canada is a major producer of commodities, including oil, so the currency tends to be sensitive to shifts in investor sentiment.
U.S. crude futures rose 3 per cent to $70.15 a barrel as Israel threatened to attack the Lebanese state if its truce with Hezbollah collapses, and as investors positioned for OPEC+ to announce an extension of supply cuts this week.
Canada’s employment report for November, due on Friday, could help guide expectations for additional interest rate cuts by the Bank of Canada. Economists expect a gain of 25,000 jobs.
Canadian government bond yields were mixed across a steeper curve. The 10-year was up 1.8 basis points at 3.101 per cent, after touching on Monday its lowest intraday level in nearly two months at 3.053 per cent.
