Loonie Touches 2-Week Low against USD

The Canadian economic data is better than what was forecasted; still the major currency of Canada, Canadian Dollar, also known as Loonie, touched its lowest level against USD in 2 weeks. The main reason behind this decline is concern on a budget showdown in its neighbor US. As the day started, Loonie showed signs of growth because of the economic data of Canada. The retail sales in the country increased for the 4th straight month in October. The forecasts on possible gains in gasoline and automobile purchases exceeded initial expectations. Not only was that, the gross domestic product in neighboring country US also was better than the economists’ predictions. Incidentally, Loonie lost yesterday as well because of the statement from International Monetary Fund, asking Canada to refrain from increasing the interest rates until the year ends, for helping fuel growth.

Loonie touched 98.97 at one time today, marking its lowest value against USD since 7th December. However, it kind of bounced back and was at 98.86 cents per USD later. 

Toronto-Dominion Bank’s Chief Macro Strategist for TD Securities Unit, David Tulk stated that Loonie’s fate will be kind of dependent during the year-end period as the budget negotiations continue. David added that though retail-sales report was good enough, if the budget discussions don’t turn out to be positive, Loonie may fade further. However, in case of such events, USD may get down too and it will be interesting to see how these two currencies fare against each other. Incidentally, Loonie has gained a total of 0.6% in December; however the overall quarterly loss was of 0.5%.

In the 3rd fiscal quarter, US economy has grown at an annual rate of 3.1% which exceeds the earlier projections made by the economists of 2.7% gain. Incidentally, US is the biggest trading partner of Canada.

Coming back to Canadian retail sales data, it increased by 0.7% and is at $39.4 billion now. The figures were released by the Statistics Canada. The initial forecast was of a 0.2% gain though. In 2012, Canadian Dollar has gained 0.2% on a whole against 9 major peers of the same. Among other currencies, the greenback has gone down by 3.4%, whereas, Krone, the major currency of Norway gained the most, that of 4.6%. The biggest loser was Yen and the same has experienced a decrease of 13% till this date.