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Canadian dollar, TSX slide ahead of uncertain election outcome

09/20/2021 | 04:23pm EDT
FILE PHOTO: A Canadian dollar coin, commonly known as the

TORONTO (Reuters) - The Canadian dollar fell to a one-month low against its U.S. counterpart on Monday and the Toronto stock market posted its biggest decline since January as Canadians headed to the polls and worries about China roiled global financial markets.

The loonie was trading 0.3% lower at 1.2810 to the greenback, or 78.06 U.S. cents, after touching its weakest intraday level since Aug. 20 at 1.2895.

Canadian Prime Minister Justin Trudeau may cling to power after the dust has settled from Monday's election, but he is likely to lose his bid for a parliamentary majority.

Foreign investors have worried that the election could result in a deadlock that hampers Ottawa's response to the COVID-19 pandemic and further slows the economic recovery from the crisis.

"No matter the result of the Canadian election, the winner may soon have to face the prospect of a sharp slowdown in China," said Adam Button, chief currency analyst at ForexLive.

World stocks skidded and oil, one of Canada's major exports, settled 2.3% lower, as troubles at property group China Evergrande sparked concerns about spillover risks to the economy.

"It's a very confusing time and that's impacting the marketplace," said Irwin Michael, portfolio manager at ABC Funds in Toronto.

Investors in equities are casting a nervous eye over some of the campaign promises made by Canadian political parties, including Trudeau's vow to raise corporate taxes on the most profitable banks and insurers.

The Toronto Stock Exchange's S&P/TSX composite index ended down 335.82 points, or 1.6%, at 20,154.54, its lowest closing level since July 22.

Financials, which account for about 30% of the TSX's valuation, fell 1.8%, while energy was down 2.8%.

Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year fell 6.6 basis points to 1.216%.

(Reporting by Fergal Smith; Additional reporting by Gertrude Chavez-Dreyfuss in New York and Sagarika Jaisinghani and Medha Singh in Bengaluru; Editing by Peter Cooney)

By Fergal Smith


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.11% 0.91769 Delayed Quote.-6.22%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) -0.14% 1.7006 Delayed Quote.-2.68%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.22% 92.176 Delayed Quote.13.40%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) 0.01% 0.7463 Delayed Quote.7.31%
EURO / CANADIAN DOLLAR (EUR/CAD) -0.03% 1.43477 Delayed Quote.-7.68%
LONDON BRENT OIL 0.28% 85.56 Delayed Quote.62.65%
NEW ZEALAND DOLLAR / CANADIAN DOLLAR (NZD/CAD) -0.13% 0.87533 Delayed Quote.-4.69%
US DOLLAR / CANADIAN DOLLAR (USD/CAD) -0.01% 1.2376 Delayed Quote.-2.83%
WTI 0.33% 83.298 Delayed Quote.69.35%
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