The loonie lost more than half a cent on Tuesday as Canada’s main stock index fell and U.S. stocks ended a six-day winning streak following a long holiday weekend.
The Canadian dollar closed at an average trading value of US79.23¢, down 0.51 of a cent US from Friday.
“The dollar is at levels not seen at a while. We’re closing in on 79¢,” said Luc de la Durantaye, managing director of CIBC Asset Management.
De la Durantaye said a decline in gold prices — the April bullion contract fell US$25.00 to US$1,331.20 an ounce on Tuesday — helped give the greenbank a leg up on several global currencies.
“Gold had rallied along with the decline of the U.S. dollar. There’s always been a bit of a negative correlation between gold prices and the U.S. dollar,” he said.
In currency markets, Toronto Stock Exchange’s S&P/TSX composite index was down 13.20 points to 15,439.44, weighed by losses in the gold, base metals and materials sectors.
South of the border, a sell-off Tuesday afternoon led by technology companies wiped out early gains in New York.
In New York, the Dow Jones industrial average fell 254.63 points to 24,964.75. The S&P 500 index was down 15.96 points to 2,716.26 and the Nasdaq composite index gave back 5.16 points to 7,234.31.
Market commentators say some of the broader issues on investors’ minds right now are looking across to the bond market and seeing the U.S. 10-year Treasury starting to approach the 3% level. Bond yields, which move opposite price, are rising on concerns of higher inflation.
Worries about inflation sent stocks falling on Feb. 2 after reports of greater U.S. wage growth increased the likelihood that the Federal Reserve could raise interest rates more rapidly, making it more expensive for businesses and individuals to borrow money.
Elsewhere in commodities on Tuesday, the April crude contract was up US24¢ to US$61.79 per barrel and the March natural gas contract was up US6¢ at US$2.62 per mmBTU.
The March copper contract was down US6¢ to US$3.19 a pound.