July 20, 2015 10:03 am
Updated: July 20, 2015 10:14 am

Loonie slides to fresh lows as economic gloom weighs

The Canadian dollar depreciated 2.4 per cent last week. It's dropped again Monday.

Credit/Canadian Press

The loonie slid below $0.77 U.S. on Monday morning as markets continue to digest last week’s central bank interest rate cut and news the economy may have entered recession.

The Canadian dollar edged down 0.05 of a cent to 76.95 cents US on Monday morning – a level surpassing the lows of the last recession in  2009.

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“The Bank of Canada rate cut dealt a severe blow to the Canadian dollar and its outlook,” Rahim Madhavji, analyst at Knightsbridge Foreign Exchange, said.

MORE: 4 reasons why the latest interest rate cut matters to consumers

The loonie dropped 2.4 per cent against the U.S. dollar last week after the central bank cut its key, trend-setting interest rate to 0.5 per cent. The cut is aimed at providing a jolt to an economy that appears to have tipped into a mild recession.

Benjamin Reitzes, senior economist at Bank of Montreal, said Monday “more soft data” is expected on the economic front over the next several weeks, which will likely drag the loonie lower still.

Retail sales data for May is set to be released on Thursday, providing a glimpse of how household spending is adjusting to the slowdown.

“The Canadian dollar looks like it’s going to weaken further,” he said.

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