Loonie at 1-week low on global growth fears

Tue Mar 6, 2012 9:29am EST
 
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By Claire Sibonney

TORONTO (Reuters) - Canada's dollar eased for a third straight session to more than a one-week low against the greenback on Tuesday, following direction in commodity prices and other riskier assets on concern that the global growth outlook once again is darkening.

China's lowering of its economic growth target and data pointing to Europe possibly slipping back into recession have slowly eroded the optimism on global markets generated by the European Central Bank's huge injection of loans to banks since December.

Fears have also heightened again over whether Greece will successfully complete a private sector debt swap by late Thursday to release a 130-billion-euro second bailout and meet bond repayments due by March 20 which would avoid a messy default.

"The Canadian dollar is still being traded off the back of global macroeconomic issues, particularly Europe, Greece and yesterday's China story," said Michael O'Neill, vice-president of foreign exchange trading at RJOFX Canada.

At 9:14 a.m. (1414 GMT), the Canadian dollar stood at C$1.0015 against the U.S. dollar, or 99.85 U.S. cents, down from Monday's North American session close at C$0.9942 versus the U.S. dollar, or $1.0058. Earlier, it weakened to C$1.0018 or 99.82 U.S. cents, its softest level since February 27.

Ivey PMI data due at 10:00 a.m. may drive further weakness for the currency if it falls below expectations.

After a strong performance last week, O'Neill said the Canadian dollar continues to grind higher within the confines of a steady U.S. dollar downtrend channel between C$0.9800-1.0060.

"The Canadian dollar is in its nice little (uptrend) channel with lots of room to bounce around inside it," he added.   Continued...

 
A Canadian Loonie, otherwise known as a one dollar coin, is displayed on top of an American one dollar bill in this posed photograph in Toronto, October 10, 2008.   REUTERS/Mark Blinch