The Canadian dollar continued to lose ground Friday morning amid a generally risk-averse market as the European Union levied another round of sanctions on Russia for its involvement in Ukraine . Investors are also waiting on next week’s U.S. Federal Reserve meeting on interest rates and a referendum that will decide whether Scotland leaves the United Kingdom .
The currency lost 0.1 of a cent to 90.42 cents US, leaving the loonie with a loss of about 1 1/2 US cents as elevated concerns about growth also weighed on it.
The loonie fell almost a full U.S. cent on Thursday alone, its lowest close since March 31 , as weaker than expected Chinese inflation pressured commodity-based currencies such as the loonie. The drop came amid signs of slowing Chinese economic growth.
The greenback has also strengthened as anticipation builds that the Federal Reserve is closer to winding down its economic stimulus and raising interest rates. Markets generally expect the central bank to move on interest rates sometime around the middle of next year, but analysts will be scanning the Fed’s announcement for indications that it could move even earlier in 2015.
Overseas, the European Union announced sanctions against Russia that will toughen financial penalties on the country’s banks, arms manufacturers and its biggest oil company, Rosneft. The United States was also expected to announce more sanctions Friday. Analysts point out that there will be a price for imposing sanctions _ they will weigh on the European economy.
Also, there has been heightened concern about the Scottish referendum slated for Sept. 18 , particularly after polls released showed the results too close to call.
On the economic front, U.S. retail sales rose by 0.6 per cent during August, which was in line with expectations.
The latest reading on American consumer confidence comes out later in the morning.