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

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TORONTO — The Canadian dollar weakened

against its U.S. counterpart on Monday as the price of oil fell

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

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 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 settled down 6.6% at $20.09 a

barrel, while the U.S. dollar snapped a week of declines

as investors braced for prolonged uncertainty and governments

tightened lockdowns to fight the coronavirus.

A 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.

On 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.

The central bank also launched its first-ever quantitative

easing program, saying it would buy government and commercial

debt.

Canada’s 10-year yield was little changed,

rising by less than 1 basis point to 0.744%.

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

(Reporting by Fergal Smith; Editing by Steve Orlofsky and Peter

Cooney)