Canadian dollar gives up gains as Wall Street falls

·2 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as Wall Street and industrial metal prices fell.

The loonie was trading 0.2% lower at 1.2675 to the greenback, or 78.90 U.S. cents, after trading in a range of 1.2600 to 1.2684.

It had earlier gained ground after data showed U.S. inflation had softened, but slid back as "equities rolled over again," said Michael Goshko, corporate risk manager at Western Union Business Solutions.

"The weakness seen in equities in the past week has led to a strengthening of the U.S. dollar and weakness in the loonie," Goshko added.

Wall Street lost ground as investors looked past lower-than-expected inflation data, focusing instead on economic uncertainties and growing chances of a corporate tax hike.

Canada sends about 75% of its exports to the United States, including commodities such as copper and oil.

Oil settled one cent higher at $70.46 a barrel but industrial metals fell, weighed down by concerns over the property market in top consumer China.

Canadian factory sales decreased by 1.5% in July from June, data from Statistics Canada showed. That was a bigger decline than analysts expected, but the previous month was revised higher to show a 3.6% gain.

Canada's inflation report for August is due on Wednesday and could offer clues on the outlook for Bank of Canada policy.

Investors have been assessing whether a sustained rise in inflation could push central banks such as the BoC and the Federal Reserve into tightening policy earlier than signaled.

Canadian government bond yields eased across a flatter curve, tracking the move in U.S. Treasuries. The 10-year yield fell 4.8 basis points to 1.173%.

(Reporting by Fergal Smith, Editing by Nick Zieminski and Kevin Liffey)

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