Currency exchange AP
Canadian currency strengthens after officials fail to take measures to break greenback's fall
The U.S. dollar weakened against most other major global currencies Monday after Group of Seven officials failed to take measures to curb the greenback's decline.
The currency declined against the euro, the Canadian dollar and most other currencies. The loonie traded at 93.11 cents (U.S.), up more than half a cent from Friday's close of 92.38 cents.
G7 finance ministers omitted mention of the U.S. currency's slide after their talks over the weekend, saying only that volatile swings in currency markets could derail a global economic recovery. Most analysts believe the greenback will continue to slide.
“We will see ongoing U.S. dollar weakness into the year end,” said Camilla Sutton, currency strategist at Bank of Nova Scotia, who believes the Canadian dollar will trade at parity by the second half of next year as commodity prices climb and the economy recovers.
That's a concern to Canadian officials. In recent days, both Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have said the strong Canadian currency poses a threat to economic recovery. The loonie has climbed 8 per cent against its U.S. counterpart in the past three months.
The loonie's latest move comes ahead of major Canadian economic releases later this week. On Friday, Statistics Canada releases its labour force survey for September, and economists expect employers added about 5,000 jobs last month. Trade numbers and the Bank of Canada's business outlook survey are also out Friday.
For now, this week looks to be another wild one for global currencies. In a weekend meeting in Istanbul, G7 leaders refrained from commenting on the U.S. dollar directly, saying that “excess volatility and disorderly movements in exchange rates” could hurt a global recovery.
Ms. Sutton expects the U.S. dollar will wilt further amid concern over ballooning deficits in the world's largest economy. The dollar's status as the world's major currency is also being questioned and that will also put pressure on the greenback, she added.
Not everyone thinks the U.S. dollar will continue its decline. Appeal could return to the currency as the country begins raising interest rates, said Yanick Desnoyers, assistant chief economist at National Bank Financial. If that happens, “expect the loonie to shed a few cents.”
Wednesday, 7 October 2009
U.S. dollar sinks after G7 meeting
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