The Canadian dollar remained weaker against its U.S. counterpart today due to falling crude oil prices as well as increasing uncertainty over the U.S. recovery. The loonie’s fall was accelerated after weaker than expected economic data showing Canada’s current account deficit widened and raw material prices fell.
Canada is a producer and exporter of crude oil so declining oil prices weigh on the commodity-linked currency.
Meanwhile, uncertainty over the U.S. economic recovery also affects the Canadian dollar since over 70 percent of Canada’s exports go to the United States.
Today’s data on Canada’s current-account deficit indicated a widening in the gap during the April-June period by more than forecast to the second largest deficit on record.
Statistics Canada reported that the main cause of the widening deficit is due to payments sent outside Canada are exceeding receipts from outside Canada by CAD 15.3 billion in the second quarter, trailing only the C$17.9 billion in the third quarter of last year. This was more than the forecast CAD 13.7 billion shortfall.