The Canadian dollar fell to the lowest level against its U.S. counterpart since July as policy makers in the world’s largest economy seek to avoid budget cuts, known as sequestration, set to begin next month.
The loonie, as the currency is nicknamed, declined for a third straight day as West Texas Intermediate oil extended the biggest drop in two weeks while Brent crude was little changed. Bank of Canada Governor Mark Carney said in a CTV News interview on Feb. 15 that recent signs of weakness in the housing market may persist over several years.
Canada’s dollar is “quite weak,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “Anything that’s negative for U.S. gross domestic product is negative for Canada.”
The loonie fell 0.3 percent to C$1.0135 per U.S. dollar at 8:17 a.m. in Toronto, the weakest since July 26. One loonie buys 98.69 U.S. cents.
U.S. lawmakers agreed to automatic spending cuts, to be spread over nine years, as part of a 2011 fiscal deal to raise the debt limit. The reductions were supposed to be so onerous that Congress and the president would never let them occur and would find a plan to replace them. The U.S. is Canada’s largest trade partner.
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