The Canadian dollar was little changed against the greenback on Thursday, with the loonie recovering from an earlier seven-week low as the World Health Organization praised China’s prompt actions to limit the spread of the coronavirus outbreak.
The WHO declared that the epidemic in China now constitutes a public health emergency of international concern.
“Equities began to turn around and currencies followed when the WHO declared the coronavirus an international emergency,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “They can offer a lot more oversight and assistance to foreign nations, so I think the market got a little bit of comfort from that announcement.”
Canada is a major exporter of commodities, including oil, so its economy could be hurt if the outbreak weighs on global growth.
U.S. crude oil futures were down 0.7% at $52.95 a barrel, clawing back some of its decline after it hit an earlier three-month low at $51.66.
At 4:22 p.m. (1922 GMT), the Canadian dollar was trading nearly unchanged at 1.3193 to the greenback. The currency touched its weakest intraday level since Dec. 11 at 1.3227.
Financial vulnerabilities like high household debt could undermine central bank efforts to keep inflation in check, since they potentially limit the effectiveness of interest rate cuts, Bank of Canada Deputy Governor Paul Beaudry said.
Last week, the central bank left its key interest rate unchanged at 1.75% but said a future cut was possible should a recent slowdown in domestic growth persist. Canada’s gross domestic product data for November is due on Friday.
Canadian government bond yields rose across a steeper yield curve on Thursday. The 10-year yield, which hit its lowest intraday level since Oct. 8 at 1.276%, was up 1.8 basis points at 1.328%.
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