The Canadian dollar weakened against its U.S. counterpart as oil prices continued to fall. Concerns over the global economic impact of the coronavirus pandemic are weighing on both the Canadian dollar and oil markets. Investors are closely monitoring developments for signs of stabilization.
The Canadian dollar fell against the U.S. dollar on Thursday, pressured by a continued slump in oil prices. The price of oil, a major Canadian export, has been declining due to concerns about weakening global demand amid the coronavirus outbreak.
The Canadian dollar was trading at 1.42 against the U.S. dollar, a decline of 0.5% on the day.
Analysts attribute the Canadian dollar’s weakness to several factors, including:
- Falling Oil Prices: The price of West Texas Intermediate (WTI) crude oil, the North American benchmark, fell below $25 a barrel.
- Global Economic Uncertainty: The coronavirus pandemic has created significant uncertainty about the global economic outlook.
- Risk Aversion: Investors are seeking safe-haven assets, such as the U.S. dollar, amid the market turmoil.
The Bank of Canada has already cut its benchmark interest rate twice this month in an effort to cushion the economic blow from the coronavirus. Further monetary policy easing is possible if the economic situation deteriorates.
The Canadian dollar’s performance will likely continue to be closely tied to oil prices and the overall global economic outlook. Investors will be watching for any signs of stabilization in these areas.