Last Updated: Friday, January 4, 2008 | 5:20 PM ET
CBC News
The Canadian dollar lost more than a full cent against its U.S. counterpart on Friday following the release of unexpectedly weak business spending figures in Canada.
The loonie closed at 99.87 cents US, down 1.05 cents US. That's its lowest level in more than two weeks.
The dollar had initially gained more than half a cent following the 8:30 a.m. ET release of a weak U.S. jobs report that boosted expectations of aggressive interest rate cuts in the U.S.
But at 10 a.m. ET, the loonie took a dramatic tumble as the Ivey Purchasing Managers Index showed that purchasing activity by Canadian managers unexpectedly tumbled in December to 45.9, from November's reading of 58.7.
The index asks a single question: "Were your purchases last month in dollars higher, the same, or lower than the previous month?" A reading below 50 indicates a decrease.
Analysts also cited several other factors that may have played a role in the Canadian dollar's dip:
- A drop of almost $2 US a barrel in the price of oil.
- The expiry of a large options contract at the same time as the purchasing report came out.
- Relatively thin trading, which amplifies volatility.
- The big drop in North American equity markets Friday.
- A lacklustre U.S. jobs report, which heightened fears that a U.S. slowdown would spill over into Canada.
