Canadian Dollar And Business Outlook

By Commodity News Service Canada

WINNIPEG, February 19 The Canadian dollar was trading at a sharply lower level versus its US counterpart at 8:45 CST Tuesday, amid worries that the US will implement a large amount of spending cuts, analysts said.

Unless US lawmakers can come to an agreement to make more specific budget cuts, a broader package of spending cuts totaling US$85 billion will come into effect at the end of February.

At 8:45 CST Tuesday, the Canadian dollar was at US$0.9870 or US$=C$1.0132, which compares with Friday’s North American close of US$0.9939 or US$=C$1.0061. Canadian markets were closed for a holiday on Monday.

Talk that the Canadian housing market is starting to weaken, and that it is overvalued, also undermined the Canadian dollar, traders said.

Soft commodity prices, including crude oil, gold and copper, also put downward pressure on the value of the Canadian currency.

Weak Canadian wholesale trade data also weighed on the Canadian unit. According to Statistics Canada, wholesale sales fell 0.9% in December, to C$49 billion.

The TSX was up 67.49 points, or 0.53%, at 8:45 CST Tuesday morning to sit at 12,754.12.