he Canadian dollar continued to weaken on realisations that the ongoing troubles in the US subprime mortgage market are likely to spread to Canada and hurt its economic growth. The Canadian dollar, or Loonie, lost ground mainly to the US dollar, which rose to 1.0690 cad today from 1.0640 cad overnight and a low of 1.0337 cad on June 25. The US dollar was helped against most currencies by safety bids on risk-aversion due to worries over a global credit crunch. "Investors realise that the worsening US subprime issue will impact Canada sooner rather than later given the tight trade and financial relationships," said an analyst at BNP Paribas, who expects the pair to test the 1.0820 cad level. The price movement is also seen as part of a correction to the Loonie's impressive six-month rally, which saw it push the US dollar from 1.180 cad to below 1.030 cad. Commodity prices had helped boost the Loonie, and because a credit crunch would mean downside risk to commodity prices, traders are unwinding some positions in the Canadian currency. GDP data for the month of May will be watched tomorrow, although the Loonie is likely to remain most sensitive to global financial flows. "Credit issues continue to dominate market sentiment and as long as equity markets stay under pressure, the US dollar has potential to move higher (against the Loonie)," said the BNP Paribas analyst.