Canadian dollar dips below 68 cents U.S. to hit lowest level in more than two decades
The Canadian dollar dropped below 68 cents U.S. for the first time in more than two decades on Monday before rebounding by more than a cent, as uncertainty over a North American trade war sparked volatility across financial markets.
The loonie traded as low as 67.6 cents U.S. early in the day, it’s lowest level since 2003, but began to climb back up on reports that Mexico had been given a one-month tariff reprieve following a call between U.S. President Donald Trump and Mexican President Claudia Sheinbaum.
Karl Schamotta, chief market strategist at Corpay, said in a note that the Mexican peso, Canadian dollar, and euro were all “ripping higher” after the report.
Prime Minister Justin Trudeau is scheduled to speak with Trump later in the day.
Following the news, the Canadian dollar rose 1.4 per cent to 68.55 cents U.S. midday, still down around 0.3 per cent from Friday’s close.
Overall, the loonie has fallen 5.25 per cent since Trump was elected president.
As the trade rhetoric has escalated, signs have been building that the loonie could be in for significant ride down, economists and currency watchers have said.
Currency watchers at Canadian Imperial Bank of Commerce are calling for the Canadian dollar to fall as low as 67.5 cents U.S. possibly closer to the end of the week and to around 66 cents U.S. if the trade dispute lasts more than six months.
In another sign of the multiple challenges facing the loonie, the U.S. dollar index “screamed higher … challenging the two-year highs posted in mid-January,” economist David Rosenberg, founder of Rosenberg and Associates Inc., said in a Monday morning note.
The U.S. dollar index measures the international value of the greenback against a basket of other major currencies
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