By TraderVox.com
Tradervox.com (Dublin) – The loonie dropped below parity against the US dollar for the first time in two months as safety demand grew in the market. The Canadian dollar has fallen for the fifth day as Hurricane Sandy sweeps the East Coast causing the cancelation of trading of US stocks. The loonie has also been weakened by the Moody’s Investor Service comments that it will cut the ratings of six Canadian-based lenders.
Adam Button, a Montreal-based analyst at Forexlive.com indicated that the loonie is today’s pergola currency as it broke below parity. Button noted that there is a high risk-off tone in the market against analysts’ expectation of fairly quiet session due to the closure in New York. He added that the Canadian dollar is being affected by the comments by moody’s on Friday. The Canadian dollar has dropped as the Standard & Poor’s GSCI Index of 24 raw materials fell by 0.4 percent today. The US stock and bond market have remained closed today as Hurricane Sandy bore down on New York.
The Canadian economic status is experiencing some shaky grounds as Kevin Page, the Parliamentary Budget Officer, reported on the office website that the government will post budget deficits for the next three years and will revert to surplus in 2015-16 fiscal year. Adam Button noted that such comments about the Canadian economy only weaken the loonie further. The Bank of Canada Governor Mark Carney, has stated that the case for higher interest rates has weakened. He gave these comments a day after proposing the removal of monetary stimulus. The emphasis on high debt levels were evident after the Moody’s Investor Service noted that it is considering downgrading Bank of Nova Scotia, Toronto-Dominion Bank and four other dominant financial institutions based in Canada, due to the high risk to Canada’s economy.
The loonie dropped by 0.4 percent to C$1.0010 per US dollar at the close of trading in Toronto yesterday.
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