TORONTO: The Canadian dollar weakened to a nearly one-year low against its US counterpart on Tuesday as an escalating trade dispute between the United States and China pressured global stock and commodity markets.
Equity and oil prices fell after US President Donald Trump on Monday threatened to impose a 10 percent tariff on $200 billion of Chinese goods, which Beijing warned it would fight back against with “qualitative” and “quantitative” measures.
Investors have been concerned the trade spat between the two economic giants could slow global growth.
US crude prices were down 1.6 percent at $64.82 a barrel. Oil is one of Canada’s major exports.
Canada runs a current account deficit, so its currency tends to weaken when risk appetite sours. The country has its own trade feud with the United States and is in slow-moving talks with the US and Mexico to revamp the North American Free Trade Agreement.
At 9:04 a.m. EDT (1304 GMT), the Canadian dollar was trading 0.5 percent lower at C$1.3270 to the greenback, or 75.36 US cents. The currency touched its weakest level since June 23, 2017 at C$1.3291.
Canadian government bond prices were higher across a flatter yield curve in sympathy with Treasuries as the trade spat lifted demand for safe-haven assets.