Canadaâ€™s dollar dropped below parity with its U.S. counterpart for the first time since August as investorsâ€™ risk appetite declined.
The currency fell for a fifth day with U.S. equity trading canceled as Hurricane Sandy headed toward the East Coast. Moodyâ€™s Investors Service warned Oct. 26 it may cut the ratings of six Canadian-based lenders.
â€œThe Canadian dollar is the marquee currency today, breaking parity,â€ Adam Button, an analyst at forexlive.com in Montreal, said in a phone interview. â€œWeâ€™re continuing to see a fairly strong risk-off tone while many market participants were expecting an extremely quiet session because of the closures in New York. Canadian banks were put on review for a downgrade, and the market didnâ€™t get to respond last week, and it is today.â€
The loonie, as the currency is known for the image of the aquatic bird on the C$1 coin, weakened 0.3 percent to 99.99 cents per U.S. dollar at 11:38 a.m. in Toronto, after touching C$1.0004. Itâ€™s the longest string of losses since May. The Canadian dollar last closed at parity on Aug. 6. One Canadian dollar buys $1.001.
The government will post a surplus of C$3.2 billion ($3.2 billion) in the 2015-16 fiscal year following combined deficits of C$36.3 over the next three years, Parliamentary Budget Officer Kevin Page said in a report posted on his officeâ€™s website today.
â€œThe forecast from the Canadian budget office is another headwind for the loonie,â€ Button said. â€œWhen you see that kind of forecast, it really takes the shine off the Canadian dollar. It certainly calls into question any ideas about a rate hike in 2013.â€
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