The outlook for the Canadian dollar just got worse.
The currency has slumped to a three-month low amid declining prices for oil, the nation’s largest export. That's adding to pressure on the Bank of Canada to cut interest rates after a report Tuesday showed the country posted its second-largest trade deficit ever, led by tumbling exports.
``That was the immediate catalyst for the selloff,'' Bipan Rai, director of foreign-exchange strategy at Canadian Imperial Bank of Commerce's CIBC World Markets unit, said by phone from Toronto. ``There's more of a chance that we'll see additional weakness in the loonie based on what the Bank of Canada expectations are.''
The loonie, as the currency is known for the image of aquatic bird on the C$1 coin, may slump to the equivalent of 77 U.S. cents per Canadian dollar in the next couple of months, a level it last touched in 2009, he said.
Twenty-eight percent of economists surveyed by Bloomberg June 30 to July 2 see the Bank of Canada lowering its benchmark rate from 0.75 percent when it meets next week. That up from 6 percent of participants in a survey conducted June 5-10.
The yield on December 2015 Bankers' Acceptance contracts, a measure of where traders project short-term rates will be over the course of the agreement, fell to 0.725, the lowest since March.