Market Overview

Loonie Looks for Shelter

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Loonie Looks for Shelter

Canada's dollar dropped below parity with its U.S. counterpart for the first time since August as investors' risk appetite declined.

The currency fell for a fifth day with U.S. equity trading canceled as Hurricane Sandy headed toward the East Coast. Moody's Investors Service warned Oct. 26 it may cut the ratings of six Canadian-based lenders.

“The Canadian dollar is the marquee currency today, breaking parity,” Adam Button, an analyst at forexlive.com in Montreal, said in a phone interview. “We're continuing to see a fairly strong risk-off tone while many market participants were expecting an extremely quiet session because of the closures in New York. Canadian banks were put on review for a downgrade, and the market didn't get to respond last week, and it is today.”

The loonie, as the currency is known for the image of the aquatic bird on the C$1 coin, weakened 0.3 percent to 99.99 cents per U.S. dollar at 11:38 a.m. in Toronto, after touching C$1.0004. It's the longest string of losses since May. The Canadian dollar last closed at parity on Aug. 6. One Canadian dollar buys $1.001.

The government will post a surplus of C$3.2 billion ($3.2 billion) in the 2015-16 fiscal year following combined deficits of C$36.3 over the next three years, Parliamentary Budget Officer Kevin Page said in a report posted on his office's website today.

“The forecast from the Canadian budget office is another headwind for the loonie,” Button said. “When you see that kind of forecast, it really takes the shine off the Canadian dollar. It certainly calls into question any ideas about a rate hike in 2013.”

Bloomberg

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: News Forex Global Markets

 

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