The loonie closed at its lowest level in nearly four years Friday as it failed to make headway against a weakened U.S. dollar.
The Canadian dollar plummeted 0.75 of a cent to 93.42 cents (U.S.) – its lowest level since February, 2010.
The U.S. dollar weakness came amid fears that it might be overvalued, especially against the euro, which rallied to its highest level against the greenback in two years.
The euro strengthened following comments from Jens Weidmann, president of Germany’s Bundesbank, who told a newspaper that the euro is recovering and that it is undervalued at current levels.
With no scheduled economic releases scheduled in either Canada or the United States, currency is trading on “broader market themes,” Camilla Sutton, Scotiabank’s chief foreign exchange strategist, said in a note.
The U.S. dollar has been gaining strength against the loonie in recent weeks amid expectations that the American economy will outpace Canada’s in 2013 and 2014.
“The U.S. economy is expected to do really well in 2014 from a macro perspective,” said Allan Small, a senior investment adviser of Allan Small Financial Group with HollisWealth.
“We’re getting better but we’re not firing on as many cylinders as the United States. Therefore their dollar is a lot stronger than ours and that’s why you’re seeing some Canadian weakness.”
Small said he wouldn’t be surprised to see the loonie fall to the 90-cent range, something that has been forecast by investment bank Goldman Sachs.
“Obviously, a weak dollar makes our exports a lot more enticing and we’ll export a lot more down to the U.S.,” Small said.
“It actually could be a positive thing, not so much a negative thing. [Except] it would be negative if you’re doing some shopping over in Buffalo.”
On the commodity markets, February crude on the New York Mercantile Exchange climbed 77 cents to $100.32 a barrel.
Gold prices rose $1.70 to $1,214 an ounce and March copper fell a penny to $3.39 a pound.