Dollar slides 1.2 cents US amid poor economic news

The Canadian dollar lost more than one cent on Friday amid falling oil prices and more weak economic news for both Canada and the United States.

The loonie closed at 78.60 cents US, down 1.2 cents from Thursday's close.

Statistics Canada said the country's current account balance — the value of everything the country imports and exports, including goods, services and investment income — fell to a deficit of $7.5 billion in the fourth quarter of 2008, the first since the second quarter of 1999.

The swing to a deficit in the last three months of last year was driven by a lower surplus for Canada's trade in goods. Statistics Canada said weakening export volumes were exacerbated by declines in export commodity prices in the fourth quarter, especially for most energy products.

Meanwhile, the U.S. government issued a big downward revision in its assessment of the state of the economy.

The U.S. Commerce Department said the economy contracted at an annualized pace of 6.2 per cent for the fourth quarter of last year, making it the worst showing in a quarter-century. The revised performance was down from the U.S. government's initial report of a 3.8 per cent annualized drop for the quarter that came out just last month.

The revised fourth-quarter figures were also worse than the 5.4 per cent annualized drop that economists had been projecting.

The slide in the loonie also came as the price of a barrel of light sweet crude oil for April delivery traded down $2.40 at $42.82 US on the New York Mercantile Exchange.