The loonie, as the currency is also known, was still headed for its first quarterly drop against its U.S. counterpart since the three months ended in June 2010 on concern adeepening global slowdown will reduce demand for raw materials. The Australia and New Zealand dollars, also related to commodities, have fallen since June 30.
“If there’s any gauge that commodity currencies are going to get guidance from, it will certainly be U.S. equities, said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG, by phone today from New York. “There’s concern all over the world. Inthis environment, I’d be more inclined to sell commodity-currency upticks, then buy the downside.”
Dollar/CAD began the week witha diplower to support at 0.9780 (a new line that didn’t appear last week). From there, the story was totally different. After crossing parity, the ru was quick and therun stopped only under the 1.0373 line, last seen in October 2010.
The bearish outlook for the US means a bearish outlook for Canada and a weaker loonie. Canadian consumer prices are rising, but this is unlikely to deter the central bank from cutting rates at these times of trouble. With WTI Crude Oil also severely hit, Canadian bears are on the move.
Recent Canadian data has been consistent with minimal to slightly negative growth in thesecond quarter,” Carney told lawmakers Friday. “At the same time, labor market developments and business investment intentions suggest continuedstrength in our domestic economy.”
Bond prices slipped across the curve as risk sentimentimproved. The two-year Canadian government bond was down 10 Canadian cents to yield 0.980 percent, while the 10-year bond droped 58 Canadian cents to yield 2.212. percent.
The S&P/TSX composite index closed up 244.32 points to 11,707.19 following a 7.5 per cent drop last week, as financials recovered on hopes that European finance ministers would take action soon to deal decisively with the government debt crisis that has put banks on the continent under immense pressure.
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