- Loonie drops 3 percent for the week as crude tumbles
- Further declines seen amid commodity rout and Fed rate rise
The Canadian dollar posted its worst week since January as tumbling crude-oil prices undermined the commodity currency.
The loonie declined as oil dropped to a six-year low, continuing a week-long slide after the Organization of Petroleum Exporting Countries abandoned its output limit. The currency’s fall has boosted the probability futures traders assign to a further interest-rate cut by the Bank of Canada, even as the Federal Reserve prepares to raise rates as soon as next week. The Bank of Canada cut its key interest rate twice in 2015, setting it at 0.5 percent in July.
"In terms of what we see happening with commodity prices, the Federal Reserve, the probability of rate increases coming soon, we certainly think the decline that we’ve seen recently in the Canadian dollar is notable and we’d expect more going forward," Nick Bennenbroek, head of currency strategy at Wells Fargo Securities LLC, said by phone from New York.
The currency, nicknamed for the aquatic bird on the C$1 coin, fell 1 percent to C$1.3756 per U.S. dollar as of 5 p.m. in New York, the weakest level since May 2004. It was down 3 percent against the dollar this week.