Canadian Dollar Drops Most in a Week as Cyprus Levy Sours Risk
The Canadian dollar posted its biggest drop in more than a week against its U.S. peer as an unprecedented levy on deposits in Cyprus’s banks threatened to throw Europe back into crisis and soured risk appetite.
The currency fell against the majority of its 16 most- traded peers as Cypriot lawmakers delayed voting on a 5.8 billion euro ($7.5 billion) levy demanded by fellow euro-zone countries to secure a bailout aimed at preventing financial collapse and a possible exit from the shared currency. Crude oil, Canada’s biggest export, fell along with global stocks.
“We seem to be back to the good old risk-on, risk-off trading,” Shaun Osborne, chief currency strategist at Toronto- Dominion Bank, said by phone from Toronto. “The correlation between the Canadian dollar and risk assets weakened substantially in the beginning of the year, but those correlations seem to have picked up substantially over the course of the past few weeks, and I think the clear focus is the uncertainty of this situation in Cyprus.”
The loonie, as the Canadian dollar is known for the image of the C$1 coin, fell 0.4 percent to C$1.0233 per U.S. dollar at 8:06 a.m. in Toronto, after earlier falling 0.6 percent, it’s biggest intraday drop since March 6. One loonie buys 97.72 U.S. cents.
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