22 October 2008

Loonie falls almost two cents

The following article is excerpted from the 21 October 2008 edition of “globeandmail.com”.

The Canadian dollar fell nearly two cents Tuesday after the Bank of Canada cut

its benchmark interest rate.

And currency specialists generally think the loonie will continue to lose altitude over the next few months.

The currency was at 82.15 cents (U.S.) in early afternoon trading, down 1.62 cents from Monday's official close. Earlier, it fell as far as 81.91 cents, its lowest intraday level since Aug. 18, 2005, according to Bank of Canada data. Its official close for the day was a little higher, at 82.39 cents, down 1.38 cents….

George Davis, chief technical analyst at Royal Bank of Canada, said he thinks the loonie will continue to trade “on the defensive” because the central bank signalled strongly that further rate cuts are likely….

What will continue to force the loonie down is the steep drop in commodity prices as well as the “very strong” U.S. dollar, which has been on a tear against most major currencies except the Japanese yen….