Canadian dollar slides to 1-week low, weighed by lower oil prices

TORONTO (Reuters) - The commodity-linked Canadian dollar fell to a one-week low against its U.S. counterpart on Thursday as a drop in oil prices offset broad-based weakness for the greenback.

FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto, January 23, 2015. REUTERS/Mark Blinch

The loonie CAD= was trading 0.8% lower at 1.3441 to the greenback, or 74.40 U.S. cents. The currency touched its weakest intraday level since July 22 at 1.3459.

The U.S. dollar .DXY fell against a basket of major currencies after U.S. President Donald Trump raised the possibility of delaying the nation's Nov. 3 presidential election, and it is on track for its worst monthly performance in a decade as the spread of the coronavirus continues to weigh on the U.S. economy.

The loonie was unable to take advantage of a weaker greenback because of the slide in oil prices, said Tony Valente, a senior FX dealer at AscendantFX.

U.S. crude CLc1 prices settled 3.3% lower at $39.92 a barrel as U.S. political uncertainty and data showing the U.S. economy suffered its steepest contraction since the Great Depression weighed. Oil is one of Canada's major exports.

Trump has approved the existing Keystone pipeline to ship 29% more Canadian crude into the U.S. Midwest and Gulf Coast after TC Energy Corp's TRP.TO decade-old expansion project was stalled again this month by legal hurdles.

Easing of COVID-19 restrictions are not yet reflected in May payroll employment, with the number of Canadians receiving pay from their employer falling by 4.1%, data from Statistics Canada showed.

Canada’s GDP report for May is due on Friday. It is expected to show some economic recovery after a sharp contraction in April.

Canadian government bond yields were lower across the curve in sympathy with U.S. Treasuries on Thursday. The 10-year CA10YT=RR fell 3.1 basis points to 0.448%, which was about its lowest since May 15.

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