Oil Prices Continue Drag on Canadian Dollar

Oil prices continue to pull on the Canadian dollar today, bringing it down against the US dollar to a level not seen since 2009. Loonie is likely to continue to fall further, as long as the oil slide is in effect.

For the Canadian dollar, almost the entire story right now is oil. Oil prices continue to slide, with crude dropping to less than $46 a barrel. The drop is bad for the Canadian economy, which relies heavily on oil for support. Indeed, Stephen Poloz, the governor of the Bank of Canada, says that he expects growth forecasts to drop by about one third of a percentage point, just due to the drop in oil prices.

With oil dragging on the Canadian economy, there are concerns that the Bank of Canada won’t be able to raise rates anytime soon. This is likely to lead to further policy divergence from the United States as well. As a result of these expectations, the USD/CAD pair has hit 1.20 for the first time in almost six years. While loonie has pared some of its earlier losses, it’s still down.

At 13:15 GMT USD/CAD is up to 1.1964 from the open at 1.1953. EUR/CAD is up to 1.4089 from the open at 1.4071. GBP/CAD is up to 1.8172 from the open at 1.8124.

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