]The Canadian dollar fell nearly a cent against the U.S. dollar on Monday to its weakest closing level in six weeks.
The loonie ended the day down 0.99 of a cent at 96.36 cents U.S. after trading as low as 95.98 cents, the lowest it has been since Oct. 6.
The drop came as commodity prices fell and rising economic uncertainty bolstered the U.S. dollar, which is often seen as a safe have in times of economic turmoil.
Oil fell 75 cents to US$96.92 a barrel, while gold was down $46.50 to US$1,678.60 an ounce. Copper fell 10 cents to US$3.29 a pound.
Stock markets also saw big drops as U.S. politicians approached a Nov. 23 deadline for an agreement on how to improve Washington’s finances by $1.2 trillion over the coming decade. The main hurdle in the bipartisan panel’s negotiations has been how much to raise in new taxes.
“The news has spurred a classic flight to safety supporting a stronger Japanese yen and U.S. dollar,” said a report from BMO Economics.
“As oil (West Texas Intermediate crude) trades almost $6 per barrel from last Thursday’s high, you’d be hard pressed to find a reason to buy the Canadian dollar against the current backdrop,” BMO said.
Even as the U.S. deadline approached, Europe was the bigger concern that will put pressure on the Canadian dollar, said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier.
“I think it will continue to go down until we get some sort of resolution out of Europe — until people feel confident that these countries that need to get money, can get money.”
On Sunday, Spain became the third European country in as many weeks — after Greece and Italy — to change its government because of discontent generated by the sovereign debt crisis.
It dumped its ruling Socialists for the conservative leadership of Mariano Rajoy, who inherits an economy racked by debt and nightmarish unemployment, which at more than 21% is the highest among the 17 countries that use the euro.
Statistics Canada reported Monday that wholesale sales rose 0.3% in September to $48.7 billion. By volume, Statistics Canada reports wholesale trade fell 0.5%. Economists had expected a 0.7% gain.
Meanwhile, the number of Americans who bought previously occupied homes rose slightly last month but remained at depressed levels. The National Association of Realtors says home sales rose 1.4% last month to a seasonally adjusted annual rate of 4.97 million.