Loonie down amid mar­ket tur­moil

Ex­perts say cur­rency has not much fur­ther to fall

Metro Canada (Vancouver) - - Metro News -

The plunge in global stock mar­kets over the past week has dragged down the Canadian dol­lar and oil prices, but some mar­ket ob­servers see signs the loonie’s for­tunes will change this year even as the Canadian dol­lar con­tin­ued its slide Mon­day.

The loonie is down slightly in the open­ing months of the year as the global stock mar­ket rout that started at the be­gin­ning of Fe­bru­ary has in­vestors turn to safe-haven as­sets like the U.S. dol­lar and the Ja­panese yen.

Af­ter climb­ing from 79.71 cents US at the out­set of 2018 to as high as 81.38 cents US on Feb. 1, the loonie re­versed course at the end of last week. As of Mon­day morn­ing, it was down to 79.40 cents US.

The Canadian dol­lar tends to move on sev­eral types of data — par­tic­u­larly com­mod­ity prices — which have also seen their for­tunes re­verse dur­ing the height­ened lev­els of volatil­ity in the mar­ket­place. When oil prices fall, the loonie typ­i­cally fol­lows suit, espe­cially against the green­back.

The C.D. Howe In­sti­tute says the Canadian econ­omy is par­tic­u­larly open and, be­cause of its re­liance on com­mod­ity ex­ports, vul­ner­a­ble to shocks from abroad.

The Canadian dol­lar’s re­sponse dur­ing re­cent tu­mult is con­sis­tent with past pe­ri­ods of volatil­ity, said Mark Mccormick, North Amer­i­can head of FX strat­egy for TD Se­cu­ri­ties.

He fore­casts the loonie will bot­tom out at about 79 cents US and set­tle into a range of 80 to 81 cents US within the next cou­ple of months.

The tu­mult that saw global eq­uity mar­kets be­gin to fall at the be­gin­ning of Fe­bru­ary was trig­gered by U.S. jobs data that showed wages grew more than an­tic­i­pated, rais­ing wor­ries that signs of higher in­fla­tion might push the U.S. Fed­eral Re­serve to in­crease in­ter­est rates more quickly.

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