The Canadian dollar was sharply lower Wednesday as nervous investors sought the safe haven of the American currency after the U.S. Federal Reserve downgraded economic growth and oil prices tumbled.
The loonie fell 0.84 of a cent to 101.93 cents US.
The greenback strengthened after the Fed said Wednesday that the U.S. economy is weaker than previously forecast and lowered this year’s gross domestic product growth estimate to 2.9 per cent from 3.3 per cent.
Fed chairman Ben Bernanke also said the U.S. central bank doesn’t plan to extend its program of Treasury purchases, known as quantitative easing.
The Canadian dollar was also heavily weighed down by oil prices that were already weak following the Fed's latest take on the economy while the stronger U.S. currency also depressed prices for other commodities.
A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.
Oil prices plunged after the International Energy Agency announced the release of 60 million barrels of oil from global strategic reserves in 28 countries because of the ongoing disruption of oil supplies from Libya. The IEA estimates that Libyan unrest removed 132 million barrels of light, sweet crude oil from the market by the end of May.
The August crude contract on the New York Mercantile Exchange fell $5.02 to US$90.39 a barrel.
Metal prices also lost ground as the July copper contract in New York lost four cents to US$4.05 a pound.
Bullion prices fell heavily with the August contract down $32.60 at US$1,520.80 an ounce after rising in the previous seven sessions.
The Greek debt crisis also persuaded investors to put risk on the backburner.
Traders looked ahead to next Tuesday when Greek legislators must approve a further euro28 billion (US$40.24 billion) in budget cuts and new taxes and back a euro50-billion privatization program in order for the eurozone countries to hand over euro12 billion (US$17 billion) in bailout funds that Greece needs to avoid bankruptcy in mid-July.
The loonie fell 0.84 of a cent to 101.93 cents US.
The greenback strengthened after the Fed said Wednesday that the U.S. economy is weaker than previously forecast and lowered this year’s gross domestic product growth estimate to 2.9 per cent from 3.3 per cent.
Fed chairman Ben Bernanke also said the U.S. central bank doesn’t plan to extend its program of Treasury purchases, known as quantitative easing.
The Canadian dollar was also heavily weighed down by oil prices that were already weak following the Fed's latest take on the economy while the stronger U.S. currency also depressed prices for other commodities.
A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.
Oil prices plunged after the International Energy Agency announced the release of 60 million barrels of oil from global strategic reserves in 28 countries because of the ongoing disruption of oil supplies from Libya. The IEA estimates that Libyan unrest removed 132 million barrels of light, sweet crude oil from the market by the end of May.
The August crude contract on the New York Mercantile Exchange fell $5.02 to US$90.39 a barrel.
Bullion prices fell heavily with the August contract down $32.60 at US$1,520.80 an ounce after rising in the previous seven sessions.
The Greek debt crisis also persuaded investors to put risk on the backburner.
Traders looked ahead to next Tuesday when Greek legislators must approve a further euro28 billion (US$40.24 billion) in budget cuts and new taxes and back a euro50-billion privatization program in order for the eurozone countries to hand over euro12 billion (US$17 billion) in bailout funds that Greece needs to avoid bankruptcy in mid-July.
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