Wednesday, August 10, 2011

Canadian Dollar Lower on Recession Fears

As fears grow that the U.S. economy could be headed for a weak period, or even another recession, the Canadian dollar has seen its value decline. The U.S. buys 75 percent of Canada’s exports and the prospects of lower demand for these goods has investors leaving the loonie for other currencies.

The Canadian dollar depreciated 0.9 percent to 98.61 cents per U.S. dollar at 8:23 a.m. in Toronto, from 97.72 cents yesterday, when it jumped 1.7 percent, the most since May 2010. One Canadian dollar buys $1.0141.

“While the Fed did make a conditional commitment and indicated it’s going to do more, it also left the impression that the near-term outlook for the U.S. economy has become exceptionally choppy,” said David Watt, senior currency strategist at Royal Bank of Canada’s RBC Capital Markets, by phone from Toronto. “They’re going to be on hold for the next two years. It’s not exactly the greatest vote of confidence in the potential for the U.S. economy to stage a sharp rebound.”

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