BLBG: Sell Canada's Dollar After Crude Oil Fell 11%, RBC Capital Says
By Candice Zachariahs
Oct. 27 (Bloomberg) -- Investors should sell Canada's currency against the U.S. dollar as declining expectations for global growth push down prices for commodities the nation exports, RBC Capital Markets Inc. said.
Canada's currency, dubbed the loonie for the aquatic bird on the one-dollar coin, is poised for its worst month since at least 1950 and on Oct. 24 touched the weakest since September 2004. Crude oil, which accounted for a 10th of Canada's export revenue in 2007, dropped 11 percent last week to $64.22 a barrel, a 16- month low.
``The somber global economic outlook which is adversely effecting commodity prices,'' supports additional U.S. dollar gains, wrote Toronto-based Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc., in a research note.
Investors should buy the U.S. dollar targeting an initial advance to C$1.30, wrote Strauss. They should exit the trade if the greenback slips to C$1.2409.
The Canadian dollar traded at C$1.2754 per U.S. dollar at 8:15 a.m. in Tokyo, from 1.2775 on Oct. 24, when it touched C$1.2842, the lowest since Sept. 23, 2004. The loonie has fallen 20 percent over the past three months as oil declined from its July 11 record of $147.27.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
