Canadian dollar hits lowest level in last 5 months
China is partly to blame for this.
On Tuesday, the Canadian dollar fell to a five-month low against the U.S. national currency. Investors are alarmed by the Chinese PMI data and are also awaiting the Bank of Canada's interest rate decision, which caused the Canadian dollar to fall. However, a rise in oil prices held back a more precipitous fall.
The rate of "loonie" decreased by 0.3%. Now one U.S. dollar is worth CAD 1.3636, that is, one Canadian dollar is worth 73.34 U.S. cents. The Canadian currency fell lower only on March 28: then USD 1 cost CAD 1.3669.
"The weak Chinese services PMI, I think that was the big reason for the drop overnight. New lows this morning but oil has brought it back," shared Silver Gold Bull's Director of Risk Management Eric Bregar in a conversation with Reuters.
Activity in China's services sector in August grew at the slowest pace in 8 months. Weak demand continues to haunt the world's second largest economy, affecting other economies.
Concerns about global growth, especially in the PRC, led to the fact that investors decided to invest in a safer currency — the US dollar. It rose against a basket of major currencies, strengthening its position amid rising bond yields.
Investors' expectations of the Bank of Canada's decision on the key rate are also affecting the "loonie". It is believed that the Central Bank on Wednesday will leave the rate at 5% after the data for the second quarter showed an unexpected contraction of the Canadian economy. Both the majority of investors and the majority of economists are confident in keeping the interest rate.
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