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Canadian dollar lags G10 peers as stop-loss selling weighs

10/21/2020 | 03:48pm EST
FILE PHOTO: Illustration photo of a Canada Dollar note

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil prices tumbled and stop-loss orders were triggered in the market between it and the Australian dollar, with the loonie pulling back from an earlier six-week high.

The Canadian dollar had rallied as much as 3.2% against the Australian dollar since the beginning of the month

The move generated a lot of investor interest in selling the AUD-CAD currency pair, before a "wicked reversal" which caused some to abandon the trade, said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

"I think that some of the stop-loss action in that cross may be part of the weakness in CAD relative to the U.S. dollar," Anderson said.

Stop-loss orders are used by investors to limit their risk in a trade.

The Canadian dollar was trading 0.1% lower at 1.3134 to the greenback, or 76.14 U.S. cents. It was the only G10 currency to lose ground against the greenback as hopes rose for a large U.S. coronavirus relief package and the price of oil, one of Canada's major exports, fell.

U.S. crude oil futures settled 4% lower at $40.03 a barrel after U.S. inventory figures showed demand weakening for refined products as global COVID-19 cases spiked.

Earlier in the session, the loonie touched its strongest level since Sept. 7 at 1.3081.

Canada's annual inflation rate accelerated to 0.5% in September but softer-than-expected retail sales growth of 0.4% month-over-month for August and a sluggish estimate for September suggest a dampening heading into the holidays, Statistics Canada data showed.

Canadian government bond yields were higher across the curve in sympathy with U.S. Treasuries. The 10-year rose nearly 1 basis point to 0.614%, having touched its highest since Sept. 1 at 0.653%.

(Reporting by Fergal Smith; Editing by Alistair Bell and Jonathan Oatis)

By Fergal Smith

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.09% 0.95525 Delayed Quote.5.02%
AUSTRALIAN DOLLAR / JAPANESE YEN (AUD/JPY) 0.14% 77.061 Delayed Quote.0.67%
AUSTRALIAN DOLLAR / NEW ZEALAND DOLLAR (AUD/NZD) 0.03% 1.04426 Delayed Quote.0.02%
AUSTRALIAN DOLLAR / SWISS FRANC (AUD/CHF) -0.03% 0.66354 Delayed Quote.-1.43%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.05% 0.73811 Delayed Quote.4.86%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.02% 1.81811 Delayed Quote.-4.13%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) 0.06% 1.73667 Delayed Quote.0.58%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.03% 80.668 Delayed Quote.-4.04%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) -0.13% 0.6946 Delayed Quote.-6.15%
EURO / AUSTRALIAN DOLLAR (EUR/AUD) 0.05% 1.6364 Delayed Quote.1.49%
NEW ZEALAND DOLLAR / CANADIAN DOLLAR (NZD/CAD) 0.05% 0.9147 Delayed Quote.4.47%
WTI -0.06% 44.125 Delayed Quote.-26.43%
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