(RTTNews) - Friday during early deals, the Canadian dollar plunged against its major counterparts as oil fell below $67 a barrel today, pulling back from a nearly 3 percent surge to a three-week high in the previous session on positive U.S. corporate earnings.
Strong results from companies like 3M & Co and AT&T Inc and a rise in U.S. existing home sale in June gave a boost to the idea that the U.S. economy is on the road to recovery, but late results from Microsoft and Amazon were less bullish.
Hopes that a recovery in the world's top energy consumer would spark a rebound in oil demand have pushed crude prices up 14 percent since a two-month low hit in the middle of July.
U.S. crude oil for September delivery sank 51 cents to $66.65 a barrel in Asian deals, after surging $1.76 to settle at $67.16 a barrel on Thursday, the highest since July 1. Crude is on track for a rise of about 5 percent so far this week.
London Brent crude fell 45 cents to $68.80.
The Canadian dollar that closed yesterday's trading at 87.22 against the yen fell to 86.70 in early deals on Friday. The next downside target for the loonie-yen pair is seen at the 85.9 level.
The Bank of Canada said yesterday that the country's recession was ending as commodity prices and consumer confidence improve, while the pace of the recovery will be muted by a strong currency.
Output will expand at a 1.3 percent annualized pace in the July-September period, the central bank said. That replaced the prior estimate of a 1 percent contraction, marking the end of a recession that started in the fourth quarter of last year.
The central bank Governor Mark Carney predicted a turnaround in Canada's economy this quarter, an earlier-than-expected recovery from the worst recession since the 1990s.
But he warned of a long, drawn-out healing process with continued job losses. The bank stands ready to take further action to stimulate the economy, especially if a stronger dollar threatens to choke growth, he said.
Carney kept interest rate unchanged at 0.25 percent on Tuesday, the lowest since the central bank was founded in 1934, and repeated he plans to leave it there through June 2010 unless there is a shift in the inflation outlook.
During early deals on Friday, the Canadian dollar declined to 1.5487 against the euro. This may be compared to yesterday's close of 1.5415. If the loonie weakens further, it may likely target the 1.561 level.
Against the U.S. currency, the Canadian dollar slipped to 1.0926 during early deals on Friday. The near term support for the loonie is seen around the 1.101 level. At yesterday's close, the greenback-loonie pair was quoted at 1.0896.
