CANADA FX DEBT-Canadian dollar weakens as precious metals sell-off spooks traders

By Fergal Smith

TORONTO, Feb 2 (Reuters) - The commodity-linked Canadian dollar gave back some recent gains against its U.S. counterpart on Monday as oil prices tumbled and precious metals added to last week's sharp declines.

The loonie CAD= was trading 0.6% lower at 1.3695 per U.S. dollar, or 73.02 U.S. cents, after moving in a range of 1.3607 to 1.3697. On Friday, the currency touched its strongest intraday level since October 2024 at 1.3479.

"A slow-motion flight to safety is underway across the currency markets this morning, as a bloodbath in the precious metals complex extends into a second week," Karl Schamotta, chief market strategist at Corpay, said in a note.

"The U.S. dollar is climbing against all of its major rivals as traders exit risky positions across a range of asset classes, and commodity-sensitive currencies like the Australian dollar, Canadian dollar, and Swiss franc are coming under selling pressure."

The price of gold fell 4%, while oil was down 5% on signs of de-escalating tensions between the United States and OPEC member Iran.

Hard commodities, such as energy and metals, accounted for about 40% of Canada's exports in November.

Domestic economic data had little impact. The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) rose to 50.4 in January from 48.6 in December, marking the first move above the 50 no-change mark in a year.

Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 1.3 basis points at 3.433%.

The Government of Canada said it plans to issue a new 10-year green bond this week subject to market conditions.