The Canadian dollar has now given back all of its gains for the year as it continues to weaken against the backdrop of a worldwide surge in COVID-19 cases.
The safe-haven U.S. dollar is rallying as stocks globally experience their longest losing streak since the pandemic first began 18 months ago as the continued spread of the highly contagious Delta variant raised doubts about the strength of the current economic recovery.
Canada is a major producer of commodities, including oil, so the dollar is sensitive to global economic prospects.
U.S. crude oil futures fell 3.5% to $69.27 U.S. a barrel after the Organization of the Petroleum Exporting Countries and their allies overcame internal divisions and agreed to boost output, sparking concerns about a crude surplus.
On July 19, the Canadian dollar was trading 1.1% lower at $1.2749 to the U.S. dollar, or 78.44 U.S. cents, its biggest decline in nearly five months. It touched its weakest intraday level since February 5 at $1.2807.
The Canadian dollar has now slumped 5.9% since notching in June a six-year high near $1.20, while it is down 0.1% since the start of 2021.
Speculators have now cut their bullish bets on the Canadian dollar to the lowest level in 10 weeks, data from the U.S. Commodity Futures Trading Commission shows. As of July 13, net long positions had fallen to 26,376 contracts from 41,178 in the previous week.
Canadian government bond yields are also lower, tracking the move in U.S. Treasuries. The 10-year bond yield touched its lowest level since February 19 at 1.170% before recovering slightly to 1.176%.
