The Canadian dollar fell nearly a cent against the U.S. dollar on Monday to its weakest closing level in six weeks.
The loonie ended the day down 0.99 of a cent at 96.36 cents U.S. after trading as low as 95.98 cents, the lowest it has been since Oct. 6.
The drop came as commodity prices fell and rising economic uncertainty bolstered the U.S. dollar, which is often seen as a haven in times of economic turmoil.
Oil fell 75 cents to $96.92 (U.S.) a barrel, while gold was down $46.50 to $1,678.60 an ounce. Copper fell 10 cents to $3.29 a pound.
Stock markets also saw big drops as U.S. politicians approached a Nov. 23 deadline for an agreement on how to improve Washington's finances by $1.2-trillion over the coming decade. The main hurdle in the bipartisan panel's negotiations has been how much to raise in new taxes.
“The news has spurred a classic flight to safety supporting a stronger Japanese yen and U.S. dollar,” said a report from Bank of Montreal.
Even as the U.S. deadline approached, Europe was the bigger concern that will put pressure on the Canadian dollar, said Ian Nakamoto, director of research at investment firm MacDougall MacDougall and MacTier.
“I think it will continue to go down until we get some sort of resolution out of Europe – until people feel confident that these countries that need to get money, can get money.”
On Sunday, Spain became the third European country in as many weeks – after Greece and Italy – to change its government because of discontent generated by the sovereign debt crisis.
It dumped its ruling Socialists for the conservative leadership of Mariano Rajoy, who inherits an economy racked by debt and nightmarish unemployment, which at more than 21 per cent is the highest among the 17 countries that use the euro.
Statistics Canada reported Monday that wholesale sales rose 0.3 per cent in September to $48.7-billion (Canadian). By volume, Statistics Canada reports wholesale trade fell 0.5 per cent. Economists had expected a 0.7 per cent gain.
Meanwhile, the number of Americans who bought previously occupied homes rose slightly last month but remained at depressed levels. The National Association of Realtors says home sales rose 1.4 per cent last month to a seasonally adjusted annual rate of 4.97 million.