Loonie on track for second-biggest decline ever as pressures pile up – FINANCIAL NEWS-ecozik.com
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Loonie on track for second-biggest decline ever as pressures pile up

The loonie is now down nearly 17 per cent against the greenback for 2015, the biggest drop since 2008, when it lost 18.6 per cent against the U.S. dollar due to a collapse in commodity prices.

The Canadian dollar is on track to see its second-biggest decline on record against the U.S. dollar, and analysts forecast the currency could go lower before it bounces back next year.

The loonie is now down nearly 17 percent against the greenback for 2015, the biggest drop since 2008, if this lost 18.6 per cent from the U.S. dollar due to a collapse in commodity prices.

With nine trading days left around, analysts say the record might be tested as a monetary policy divergence between the U.S. Fed and Bank of Canada pressures the loonie.

“The Canadian dollar is expected to increase in second half of 2016, but the currency could be in for more pain soon as markets still speculate if the Bank of Canada could cut rates one more time before an expected rate rise in the second 1 / 2 of next year,” said RBC economists in a note to clients.

The Canadian dollar added 0.03 of a U.S. cent to 71.71 US cents Friday, a day after slipping below 72 US cents the very first time since May 2004.

The disappointing economic data on Friday –  consumer prices rose under expected in November and wholesale trade experienced an unexpected contraction in October – continues a string of worse-than-expected readings in the past few months, adding to the slew of pressures the loonie has faced this season. Oil prices, another driver of the dollar, have fallen to levels not seen since 2008.

In yesteryear, a low Canadian dollar has been a boon for Canada’s manufacturing industry. Despite its recent slide, however, manufacturing and exports have yet to add a boost to Canada’s economy.

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