December 5, 2008

Loonie lowest since 2004

CANADA - The Loonie traded as low as 76.88 cents US today, its lowest level since September 2004, down 1.36 cents from yesterday and below the previous multi-year intraday low set in late October. Late in the morning the currency was at 76.99 cents US.

The Canadian petro-dollar's decline came as crude oil slumped under US$42 a barrel, losing $1.38 to US$41.84 on the New York Mercantile Exchange. The recessionary rout embraces other commodities, with gold down $16.20 at US$749.30 an ounce and copper sagging 8.55 cents to US$1.3840 a pound.

The loonie was further undercut by evidence that the Canadian economy's recent relative immunity to the global economic slowdown has worn off. Statistics Canada reported today that Canada lost 70,600 jobs in November – the worst single-month drop since the recession of the early 1980s – and the jobless rate increased to 6.3 per cent.

"With today's dismal employment report, there is no doubt that the Canadian economy is in recession and the U.S. contraction is accelerating," commented BMO Capital Markets chief economist Sherry Cooper.

Analysts suggest that if oil prices drop below $25 US/barrel that the Canadian dollar will drop to 65 cents, or back to 2002 levels.

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