The Canadian dollar fell against its so-called commodity-currency counterpart in Australia as the U.S. government began its first partial shutdown in 17 years, imperiling growth in Canada’s biggest trading partner.
The currency, called the loonie, weakened against the majority of its 16 most-traded peers as debate looms on raising the U.S. debt ceiling within three weeks. Australia’s dollar climbed after the nation’s Reserve Bank left borrowing costs unchanged today. The U.S. dollar fell versus most major counterparts. A partial shutdown of the federal government would cost the U.S. at least $300 million a day in lost economic output at the start, according to IHS Inc. (IHS)
“We’ve got uncertainty whether or not Canadian exports to the U.S. are going to rebound sharply over the next several months with this uncertainty over the government shutdown and the U.S. economic outlook,” David Watt, chief economist at the Canadian unit of HSBC Holdings Plc, said in a phone interview. “It makes sense the Canadian dollar would lag its commodity peers during an episode such as this. It will behave more like the U.S. dollar because of the close ties.”
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