The Canadian dollar has declined to its lowest level in three months against the U.S. dollar as oil prices drop and new data shows the manufacturing sector weakening.
On the first trading day of the New Year, the loonie fell 0.7% to trade at 75.05 U.S. cents, its lowest level since Oct. 12, 2023.
The slump in the Canadian dollar coincides with a rally in the U.S. dollar against a basket of major currencies, bolstered by a rise in bond yields.
Lower oil prices and weak manufacturing data pulled the Canadian dollar lower and ended a rally that began last November.
New data showed that Canada's factory output in December declined at its fastest pace since the early months of the Covid-19 pandemic as an economic slowdown deepens.
At the same time, the price of oil, one of Canada's major exports, fell on interest rate jitters and as military tensions in the Red Sea eased.
West Texas Intermediate (WTI) crude oil is now trading at $70.38 U.S. per barrel.
For all of 2023, Canada’s currency gained 2.3%.
