By Chris Fournier - Aug 25, 2010 8:10 PM GMT+0800
Canada’s dollar depreciated for a fifth day versus its U.S. counterpart, the longest string of losses since January 2009, as risk aversion drove global stocks lower, weakening the outlook for currencies tied to growth.
The loonie, as the currency is sometimes known, is down 1.1 percent this year. A faltering economic recovery means the chances for further Bank of Canada interest-rate increases in 2010 are diminishing, dimming the currency’s appeal.
“It’s a simple reflection of risk aversion,” Shaun Osborne, chief currency strategist in Toronto at Toronto- Dominion Bank’s TD Securities unit, wrote in an instant message. “It feels a little as if the impetus for higher rates in Canada beyond September is perhaps fading a little more.”
The Canadian currency retreated 0.4 percent to C$1.0652 per U.S. dollar at 8:09 a.m. in Toronto, compared with C$1.0615 yesterday, when it touched C$1.0665, the lowest point since July 6. One Canadian dollar buys 93.88 U.S. cents.
Osborne predicted the loonie will head toward C$1.0775 if it breaks through C$1.0675.
The MSCI World Index, a gauge of equities in 24 developed nations, also fell a fifth day.
Bank of Canada policy makers next meet on Sept. 8, after raising interest rates by a quarter percentage point to 0.75 percent on July 20, the second increase in two months.