Loonie is declining versus US dollar

Market Leader informed

Canadian dollar lost 2.2% versus its American counterpart since October 14 when it reached the parity with the greenback. Loonie was declining as the price of crude oil dropped and also due to the expectations that the Bank of Canada won’t raise its benchmark interest rate until 2011.

Elizabeth Belugina, an analyst of FBS brokerage company, claims that the main factor that’s making pressure on Canada’s currency is the dynamics of US dollar. According to her, it happens as weak US dollar provides an opportunity for short covering ahead of the Federal Reserve meeting scheduled on November 2-3.

Canada’s central bank left on October 19 its key interest rate at 1% reducing the forecast for the third quarter GDP growth to 1.6% from July estimate at 2.8%.

The greenback is the worst performing major currency during the past 3 months, while the currency of Canada, about two-thirds exports of which go to the United States, is the second-worst one.



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