The Canadian dollar hit a three-month low versus the US dollar on Monday, spurred by renewed risk aversion and the declining price of crude oil. Much of the day's action was an extension of the overnight session, where financial woes prompted a flight to the safety of US dollar assets as American International Group posted a big loss amid US government aid for the insurer.
"Most of the Canadian dollar weakness, in honesty, we'd seen before we'd walked in the door," said Shane Enright, currency strategist at CIBC World Markets in Toronto. The currency closed at C$1.2914 to the US dollar, or 77.44 US cents, down from Friday's close of C$1.2723 to the US dollar, or 78.60 US cents. It hit a three-month low of C$1.2918 to the US dollar, or 77.41 US cents, late on Monday afternoon.
The currency briefly pared losses after domestic data showed the economy shrank at an annualised rate of 3.4 percent in the fourth quarter of last year, below market forecasts for a 3.6 percent contraction.
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