Loonie’s downtrend may continue

11-23-2009 10:57

The Loonie, an informal term for the Canadian Dollar, posted this week’s trading session the weakest results in more than eight weeks on the back of falling equities and commodities, which have a major impact on the sentiment and rates of the Loonie, continuing its downtrend.

Crude oil and equities

Safe haven currencies such as the Greenback and the Japanese Yen profited from dominating risk aversion, while the Loonie dropped not only versus those currencies, but also against several other popular currencies, as a result of the strong influence of stocks and commodities on the Canadian Dollar. Crude oil and equities worldwide continued to drop, mainly in the Asian region and weren’t able to erase Thursday’s losses.

Frustrate recovery

After the Bank of Canada emphasized that a strong national currency may frustrate the recovery of the Canadian economy, the Loonie has been falling against the US Dollar. At the same time, equities and commodities create positive conditions for the US Dollar to gain against the Canadian Dollar.

Loonie’s downtrend

Currency analysts linked the Canadian Dollar’s decrease with this week’s equities movements, implicating that the crude oil’s decline previously this week also affected the Loonie negatively, resulting in the strongest downtrend, which could persist as long as equities continue their losing streak.