The Canadian dollar is at its lowest level in more than five years this morning, hit by an oil price war sparked by Saudi Arabia and a “very dovish” Bank of Canada governor.
The loonie, as Canada’s dollar coin is known, sank below 88 cents U.S. today, touching the lowest level since the summer of 2009, as crude prices tumbled to their lowest in about three years.
“I think what we have is really everything working against the Canadian dollar here,” said chief currency strategist Camilla Sutton of Bank of Nova Scotia.
The loonie, which hit a low point of 87.51 cents at one point today, could falter even more given global and domestic developments.
The Canadian dollar has now lost more than 2 per cent over five trading days as blow follows blow.
“These developments include a disappointing GDP release last Friday, coupled with the collapse in oil prices and a dovish Governor Poloz, all of which have taken place in an environment of broad [U.S. dollar] strength,” Ms. Sutton said.
“The near-term CAD outlook has deteriorated materially and the downward trend is too strong to fight,” she added, referring to the Canadian currency by its symbol.
The collapse in oil prices, spurred on yesterday by Saudi Arabia’s announcement of a cut in prices in the United States, diminishes the economic outlook for Canada, Ms. Sutton explained.
Add to that the fact that there’s no bottom in sight.