The Canadian dollar closed below 70 cents U.S. Wednesday for the first time in nearly 13 years while the Toronto stock market registered another triple digit loss.
The loonie finished the day at 69.71 cents U.S., down 0.43 of a cent since Tuesday’s close. The last time the Canadian dollar closed beneath the 70-cent U.S. mark was on April 30, 2003, when it was 69.76 cents U.S.
Colin Cieszynski, chief market strategist at CMC Markets, says the 70-cent mark constitutes a “pretty significant psychological hurdle.”
Cieszynski said the dollar’s decline has been motivated primarily by falling oil prices — and their potential implications for monetary policy.
“There’s been a lot of growing speculation that the Bank of Canada’s governor (Stephen) Poloz could kick off 2016 with a rate cut the same way he did in 2015,” Cieszynski said.
“There’s a lot of concerns that the falling oil price could lead to more layoffs in the oil sector and deepen the recession that we’re seeing in the oilpatch, so there is a growing possibility of that, although up until now he’s been more content to let the falling loonie do a lot of the stimulus work for him.”
For the second day in a row, Finance Minister Bill Morneau found himself answering questions about the dollar’s nosedive.
“I believe that there are opportunities with a lower dollar. There are also challenges,” he said in Toronto, where he held pre-budget consultations.
“We will remain focused on that and consider that in our planning. It’s not something that’s in our control.”
The S&P/TSX composite index lost 203.49 points at 12,170.41, marking its 10th losing day in 11 trading sessions since the Christmas break. The metals and mining sector was the biggest loser on the TSX, dropping more than three per cent. Industrials stocks lost roughly 2.7 per cent.
The TSX has been hammered by plummeting crude prices and lacklustre economic data out of China in recent weeks. Since Christmas Eve it has lost 1,139.39 points, or about 8.6 per cent of its value.
New York markets also took a turn for the worse after two days of gains that had put an end to a string of heavy losses.
The Dow Jones plunged 364.81 points to 16,151.41, while the S&P500 shed 48.40 points to 1,890.28 and the Nasdaq declined 159.86 points to 4,526.06.