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Loonie drops to April 2009 levels; oil depressed by forecast for lower prices

Malcolm Morrison, The Canadian Press

A Canadian dollar or loonie is pictured in North Vancouver, on March 5, 2014. The Canadian dollar was at its lowest levels since April 2009 on Monday morning as oil prices continued to retreat amid a bearish price forecast from investment bank Goldman Sachs. THE CANADIAN PRESS/Jonathan Hayward
A Canadian dollar or loonie is pictured in North Vancouver, on March 5, 2014. The Canadian dollar was at its lowest levels since April 2009 on Monday morning as oil prices continued to retreat amid a bearish price forecast from investment bank Goldman Sachs. THE CANADIAN PRESS/Jonathan Hayward

TORONTO - The Canadian dollar closed down sharply Monday, hitting a fresh multi-year low as oil prices continued to retreat amid a bearish price forecast from investment bank Goldman Sachs.

The currency lost 0.71 of a cent to 83.56 cents US, its lowest level since late April 2009.

The February crude contract in New York fell $2.29 to US$46.07 a barrel after energy analysts at Goldman Sachs reduced forecasts for global benchmark crude prices, predicting inventories will increase over the first half of this year.

It forecast that West Texas Intermediate crude — the North American benchmark —will trade at US$41 a barrel and global benchmark Brent at $42 in three months. It had previously forecast WTI at $70 and Brent at $80 for the first quarter.

Elsewhere on commodity markets, lower demand prospects sent copper to a 4 1/2 year low with the March contract three cents lower at US$2.73 a pound. February gold bullion gained $16.70 to US$1,232.80 an ounce.

The loonie failed to find lift from the Bank of Canada's latest business outlook survey, which said that Canadian businesses overall see brighter days ahead.

The survey found Western Canadian companies planned to reduce their investments in equipment and hiring following the collapse in oil prices. On the other hand, Eastern and Central Canadian companies said they were planning to invest more, particularly in the manufacturing industry.

The survey also found companies that expected to benefit from the improving U.S. economy were more optimistic about the future than firms more focused on the domestic market.

In the U.S., investors will take in December retail sales data on Wednesday. Economists are looking for a 0.1 per cent rise, with much cheaper gasoline prices encouraging consumer spending.

The U.S. December consumer price index and industrial production figures for December come out on Friday.