It’s not getting any easier for Canadians who have watched their groceries, clothing and foreign travel costs shoot higher among a host of other rising costs associated with a plummeting loonie.
The Canadian dollar was rocked again on Wednesday, dropping another half cent against the U.S. greenback by the afternoon amid weak oil prices and a surging U.S. currency.
The loonie was down 0.47 per cent of a full U.S. cent to stand at 78.39 cents U.S., a drop that has pushed the Canadian dollar lower by nearly a full penny this week.
Skittish markets
The pullback came as stock markets dropped and traders bet that U.S. interest rates may start to move up a bit sooner than expected. The interest rate threat is compounding the pressure on the loonie by also making markets nervous, resulting in a flight to safe-haven investments — namely the U.S. dollar, which is considered perhaps the safest investment on the planet.
MORE: Canadian dollar expected to slip to fresh low of 75 cents
U.S. economy watchers suggest the Federal Reserve may start to hike short-term interest rates starting in June, a decision that could tap the brakes on economic growth, or at least hamper U.S. corporate profits. That threat means there’s likely more pressure ahead on the loonie, experts say.
“The Canadian dollar continues to get hammered by broad based U.S.-dollar strength,” wrote Knightsbridge Foreign Exchange expert Rahim Madhavji in a note.
Jobs report
Madhavji said Canadian job numbers for February, set to be released Friday by Statistics Canada, could weigh on the loonie further this week.
“Friday’s employment data in Canada will be an important catalyst to watch and could dictate the next move up in the U.S. dollar if Canadian jobs data is weak,” Madhavji said.
BMO economists said at the start of the week the February jobs report is “expected to come in around flat, as the drop in oil prices weighs on hiring in the Prairies.”
The loonie has held its ground above the 78-cent level, but experts at TD Economics don’t expect that to continue. TD predicts the loonie will fall further throughout the year, eventually bottoming at 75 cents U.S.
— With a file from Canadian Press
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