The Canadian dollar shed more than a cent against the US dollar on Tuesday, due in part to a stronger greenback and a negative view on world economic growth stemming from a rough start in the equities markets. Domestic bond prices were higher on a flight to safety bid in response to the softer equity markets.
The Canadian dollar was at 99.54 US cents, valuing a US dollar at C$1.0046, down from US $1.0067 to the US dollar, or 99.33 Canadian cents, at Friday's close. "Canada had a bit of a rocky night along with most currencies against the US dollar, which had a pretty significant move," said Steve Butler, director of foreign exchange at Scotia Capital.
The strength in the greenback comes as investors take the view that the recent aggressive moves by the US Federal Reserve will help prevent the US economy from slipping into recession. The Fed has cut its key lending rate by 225 basis points, to 3 percent, since September and the market is pricing in at least another 75 basis points of easing by the end of the year.