Canadian dollar hits 2-1/2-month low as Middle East uncertainty spooks investors
FXC•The Canadian dollar weakened to a two-and-a-half-month low against the U.S. dollar, trading 0.2% lower at C$1.4165 per U.S. dollar. Uncertainty over Middle East peace talks bolstered demand for the U.S. dollar as investors awaited Canadian GDP data.
1. Loonie weakens
The Canadian dollar touched 1.4175 per U.S. dollar, its weakest intraday level since July 9, before trading at 1.4165, or 70.60 U.S. cents. The U.S. dollar held near a two-month high against a basket of major currencies.
2. Markets seek safety
An official briefed on negotiations said Qatari mediators were likely to hold separate talks with Iran’s foreign minister and the U.S. side in New York on Monday or Tuesday. Adam Button, chief currency analyst at investingLive, said investors were looking for safety from Iran-related uncertainty, which tended to benefit the U.S. dollar. Gold fell 3.7%, while U.S. crude futures rose 0.8% to $93.12 a barrel.
3. GDP and bond yields
Canadian GDP data for July, due Tuesday, could guide expectations for a Bank of Canada interest rate hike next month. Economists expect GDP to be flat compared with June. Canadian bond yields rose across the curve, tracking U.S. Treasuries; the 10-year yield was up 3.7 basis points at 3.962%, after reaching 4.017%, its highest since October 2023.
