If you’ve been waiting for the loonie to pop back up before buying some American dollars, you may be in for a long one.
The loonie is in outright sell-off mode versus the U.S. dollar on Friday, with the Canadian currency dropping more than half a cent to below 85.5 cents U.S.
The decline extends losses the loonie has taken against the greenback in recent weeks as oil prices have continued to tumble.
Oil, an important driver of economic growth in Canada which supports the dollar, was down 77 cents or 1.5 per cent on the first day of trade of 2015, to $52.50 a barrel in New York. Oil prices have been halved since reaching a peak in June.
Currency weakness elsewhere also pushed the loonie lower on Friday. The euro fell to its lowest level since 2010 as the Eurozone’s central bank signaled it is prepared to step up stimulus efforts to kick-start economic growth in the sluggish EU.
That’s sent the U.S. dollar higher against virtually every currency it trades against, as money flows out of other currencies and into the safety of the U.S. dollar.
While oil prices may recover from their current lows as 2015 progresses, many experts suggest the loonie will remain within its current range or lower through the balance of the year.
“The loonie will remain on the defensive again this year, and we look for the currency to approach 83 cents by late-2015,” Doug Porter, chief economist at Bank of Montreal said.
Comments