LoonieLarry MacDougal
The Canadian dollar dropped more than a cent Wednesday as the U.S. dollar rallied against most currencies.
Following Tuesday's rocky trading the loonie's recent slump continued Wednesday, but strategists caution this is likely just a temporary blip because Canada's currency looks strong across the board.
After losing over a cent early Tuesday, the loonie recovered half that slide the end of trading on Tuesday. But Wednesday it slipped again, closing at at 95.67 cents (U.S.).
"What we're seeing is very much a case of risk aversion," said Jeremy Stretch, a foreign exchange strategist with CIBC World Markets in London. The drop "is primarily a U.S. dollar recovery story." After the Federal Reserve released a negative statement Tuesday, investors flocked to the U.S. dollar, which is viewed as a safe haven in weak markets.
However, Mr. Stretch noted the Canadian dollar is just one of many currencies that lost ground to the greenback. Both the Australian dollar and the Norwegian krone, two commodity currencies, also slid.
Once global fear subsides, he said, the Canadian dollar should look favourable once again. "There's no reason to suggest that the Canadian dollar will continue to weaken."
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