The Canadian dollar eased against the US currency on Friday and the 30-year bond yield plunged to a record low as worries about potential downgrades of weaker euro zone countries spoiled risk appetite. Volume was light across financial markets heading into the weekend. Trading was choppy as perceived risky assets such as the Canadian dollar gave up much of their initial gains.
The Canadian dollar ended the North American session at C$1.0370 against the US dollar, or 96.43 US cents, down slightly from Thursday's close of C$1.0357 versus the US dollar, or 96.55 US cents. It ended the week 1.8 percent softer. RBC Capital Markets predicted on Thursday that a weaker Canadian dollar will remain a theme heading into 2012 as global growth concerns persist.
"Since the US credit crisis in 2007, equity markets have had the most significant negative correlation with the US dollar versus Canada," RBC's chief technical analyst George Davis wrote in a report to clients. "With a long-term downtrend remaining in place, moves to the C$1.0800-C$1.1100 region should present attractive hedging opportunities for corporate accounts in H1 2012," Davis added.
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