Canadian Dollar Extends Fall As Economy Contracts

The Canadian dollar extended weakness against its major opponents on Friday, as Canadian economic growth turned negative in November, due to declines in manufacturing, mining, and oil and gas extraction.

Data from Statistics Canada showed that GDP fell by 0.2 percent in November, following a 0.3 percent advance a month earlier. The growth was expected to be flat on month.

Annually, the economy grew 1.9 percent, less than the 2.1 percent rise expected by the economists. The GDP growth was 2.3 percent in October. The annual rate was the slowest since March 2014.

The Bank of Canada last week cut its benchmark interest rate to 0.75 percent from 1.0 percent, due to the implications of lower oil prices. Since the country relies heavily on oil exports for growth, the rate cut would help to offset the "instability" caused by plunging oil prices, the BoC governor Stephen Poloz said.

Sliding prices for oil, copper and gold have arose speculation that the central bank might cut its overnight rate by another quarter percent again.

The loonie declined to 1.2797 against the greenback, a level unseen since March, 2009. Continuation of the loonie's bearish trend may lead it to a support around the 1.30 zone. The pair ended yesterday's trading at 1.2615.

The loonie moved down to 91.73 versus the Japanese yen for the first time since March 2014. The loonie-yen pair was valued at 93.71 when it closed deals on Thursday. Next key support for the loonie may be located around the 90.00 mark.

The Canadian currency slipped to a 1-1/2-month low of 1.4489 against the euro, compared to Thursday's closing value of 1.4280. The next likely support for the loonie is seen around the 1.46 region.

Reversing from an early high of 0.9788 against the aussie, the loonie hit a 2-day low of 0.9907. The loonie is possibly seen finding support around the 1.00 level. At Thursday's close, the pair was quoted at 0.9793.

Looking ahead, Reuters/University of Michigan's final consumer sentiment index for January is due shortly.