Canada’s dollar breaks another 2003 record, US index futures turn red

The forecast for the Canadian dollar is not looking too bright and analysts fear the worst because it recently dropped below the 70-cent U.S. level for the first time since 2003.

Richard Benson, co-head of portfolio management at currency fund Millennium Global, said the Canadian dollar, down by a third in value against its USA counterpart since 2012, was suffering from bets on more easing of monetary policy next week. The Chinese equity market rallied and closed 2% higher led by smaller Chinese firms who have pledged to stabilize the market. The government of the province of Alberta, the heart of the Canadian oil industry, has warned it will be hard to fulfill its campaign promises because of the negative impact of falling oil prices.

For the second day in a row, Finance Minister Bill Morneau found himself answering questions about the dollar’s nosedive.

NY futures were also down. “It’s not something that’s in our control”.

Even with Thursday’s triple-digit gain, the Toronto market has lost more than 900 points, or 7.1 per cent, since the Christmas break.

The Dow Jones index futures were up 83 points at 16,139 points and S&P 500 futures advanced 12 points to 1,893, although most major overseas markets were down.

Asian and European markets were also in the red.

“Who knows if at some point the bargain hunters might start to step in again?”

On the commodity markets, the February gold contract was down $4.20 at US$1,082.90 an ounce and the February crude contract was up $1.13 at US$31.61 per barrel.

Following the poor USA economic data, the interest rate futures market has now priced in just one additional rate move by the Federal Reserve this year, compared with expectations of three hikes.

The Canadian dollar, meanwhile, dropped to a fresh 12-year low against the US dollar. “It’s a sign that the economy is doing well, and that, in the long run, is positive for corporate earnings and should be good for stocks”.