C$ lowest vs US$ since May 2010 as rout continues
By Leah Schnurr
TORONTO (Reuters) - The Canadian dollar hit a new 3-1/2-year low against the greenback on Wednesday, weakening for a third straight day and underscoring market expectations that the loonie will be pressured further in 2014.
The currency was also hurt by strength in the U.S. dollar after data showed the U.S. private sector added more jobs than expected in December. The report boded well for the more comprehensive official unemployment figures due at the end of the week.
Wednesday's decline pushed the Canadian dollar through the C$1.08 level and extended a rout started in the previous session when data showed a steep widening of the Canada's trade deficit and a contraction in a gauge of purchasing activity.
"It certainly feeds the market sentiment that for at least the first quarter or two of the year, the Canadian dollar is going to be under pressure," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto.
Analysts said the data raised some concerns the Canadian economy could underperform the recovery in the United States, leaving the Bank of Canada on hold as the U.S. Federal Reserve gradually unwinds its economic stimulus.
"It highlights the vulnerabilities of Canada," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.
"One is that our export sector hasn't recovered at the pace the Bank of Canada had expected it to, and that there is a large question mark overhanging it in terms of will it be able to provide the contribution to growth that is expected for 2014."
"The second piece is what is going on in the Canadian oil sector and what will take place as U.S. domestic production increases." Continued...