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FX Daily Updates
Canadin dollar falls on equity sell off, trade tensions
OTTAWA, Jan 27 (Reuters) - The Canadian currency weakened against the U.S. dollar on Monday as uncertainty around international trade exacerbated the impact of investors selling local equities to switch to the safe-haven U.S. dollar, making the greenback stronger. The loonie was trading 0.27% weaker at 1.4381 per U.S. dollar, or 69.54 U.S. cents, but continued to be in the range of 1.4316 to 1.4383 where it traded mostly last week. "A lot of what has been driving the loonie lately has been the noise out of the White House," said Étienne Bordeleau-Labrecque, Portfolio Manager at Ninepoint Partners. While Monday's weakening of the loonie was also due to dumping of Canadian shares by investors who moved into the U.S. dollar, trade uncertainty and the threat of tariffs will continue to keep the Canadian dollar under stress, he said. Earlier this month as U.S. President Donald Trump's inauguration approached, the loonie fell to its weakest closing this year to 1.4485 against the greenback. Market analysts and economists have said that the current weakness of the Canadian dollar is also because investors are factoring in the interest rate differential between the two countries. The Bank of Canada is likely to announce a 25 basis point cut in its benchmark interest rate on Wednesday while the U.S. Federal Reserve, on the same day, is expected to hold its rates still. Trump has threatened to slap a unilateral 25% tariff on all goods imported from Canada from Feb. 1, which has also impacted the loonie due to its heavy dependence on the U.S. trade. The U.S. is Canada's biggest trading partner and consumes over three-fourths of all its exports. The sell-off in shares and impending trade tensions with the U.S. pushed bond yields down, with the 10-year government bond yield falling 7.5 basis points to 3.189%. Sign up here. https://www.reuters.com/markets/currencies/canadin-dollar-falls-equity-sell-off-trade-tensions-2025-01-27/
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