Canada Dollar Drop Is Largest in Three Years
By Chris Fournier - Oct 1, 2011 12:00 AM ET
Bloomberg.com
Canada’s dollar depreciated by the most since October 2008 as concern the global economy is sinking back into recession spurred a haven rally in the U.S. currency and dimmed the outlook for commodity prices.
The currency registered weekly and quarterly losses as volatility increased on speculation European officials haven’t contained the region’s debt crisis as the prospect of a Greek default looms. An Oct. 7 government report may show that Canadian job creation is slowing.
“There’s a paranoia in the market,” said Aaron Fennell, a futures specialist at Bank of Nova Scotia’s ScotiaMcLeod unit, by phone yesterday from Toronto. “Traders are waiting to see what happens in Greece. That’s undermined commodity prices, and it’s caused a flight to cash, that’s usually U.S. cash, which pushes up the U.S. dollar and brings down the Canadian dollar.”
The Canadian currency ended yesterday at C$1.0503 per U.S. dollar in Toronto, down 2.2 percent on the week, 7.4 percent on the month and 9 percent on the quarter. It touched C$1.0504 yesterday, the weakest since Sept. 8, 2010. One Canadian dollar buys 95.21 U.S. cents.
The loonie, as Canada’s dollar is known for the image of the aquatic bird on the C$1 coin, advanced to a three-year high of 94.07 cents on July 29 before plunging along with other risk- related assets as investors, concerned that a potential Greek default may spark a run on European banks and send the global economy into another recession, took refuge in the U.S. dollar and the yen.
.
.
.
The Standard & Poor’s 500 Index retreated 2.5 percent and finished with the biggest quarterly drop since 2008. Equity losses forced portfolio managers to sell the Canadian dollar to buy greenbacks for monthly rebalancing of portfolios, according to Shane Enright at Canadian Imperial Bank of Commerce.
“Month-end flows are dominating,” said Enright, executive director at the bank’s CIBC World Markets in Toronto, by e-mail yesterday. “Also quarter-end, which compounds the volatility.”
Full story: http://www.bloomberg.com/news/2011-10-01/canada-dollar-drop-is-largest-in-almost-three-years-on-economy.html
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
| 