By Chris Fournier Nov. 5 (Bloomberg) -- Canada's currency depreciated against its U.S. counterpart for the first time in three days after declines in European and U.S. stocks as well as crude oil, signaling a decrease of risk appetite. ``Today's move would be because of the reversal in equities as well as the reversal in commodities,'' said Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc. in Toronto. ``That indicates some risk aversion is returning to the market and passing through into a weaker Canadian dollar.'' The Canadian dollar fell as much as 1.4 percent to C$1.1663 per U.S. dollar, from C$1.1502 yesterday. It traded at C$1.1652 at 11:26 a.m. in Toronto. One Canadian dollar buys 85.83 U.S. cents. Europe's Dow Jones Stoxx 600 Index lost 2 percent to 228.76. The Standard & Poor's 500 Index declined 1.2 percent to 993.58. ``Equities are more indicative of general investor sentiment and the outlook for the global economy,'' said Strauss, who forecasts the Canadian dollar will weaken to C$1.27 by year-end. ``They provide a forward looking indicator on whether investors are expecting a mild global recession or whether it's going to be a more protracted global recession.'' Crude oil for December delivery declined as much as $4.74, or 6.7 percent, to $65.79 a barrel on the New York Mercantile Exchange. Prices for crude, which accounts for a tenth of Canada's export revenue, have tumbled 54 percent since reaching a record $147.27 on July 11. Democratic Illinois Senator Barack Obama won the U.S. presidency last night, defeating Republican Senator John McCain of Arizona. `Next Big Event' ``We'll be watching equities to see how they react to the new U.S. president,'' Shaun Osborne and Jacqui Douglas, Toronto- based currency strategists at TD Securities Inc., wrote in a note to clients. ``The next big event to focus on will be tomorrow morning's Bank of England and European Central Bank interest-rate decisions.'' ECB President Jean-Claude Trichet said last week the bank is likely to lower its benchmark rate from 3.75 percent at its next policy meeting. The median forecast of 55 economists surveyed by Bloomberg is for a 0.5-percentage-point reduction. BOE Governor Mervyn King will also cut borrowing costs by the same amount, to 4 percent, according to a separate survey. `Very Likely' A 50-basis-point cut at the ECB is ``very likely and we would attach only a minor probability to 75 basis points,'' while the BOE ``will cut by at least 50 basis points,'' UBS AG economists Stephane Deo and Amit Kara in London wrote in a note. The yield on the two-year government bond rose 2 basis points, or 0.02 percentage point, to 2 percent, the first advance in six days. The price of the 2.75 percent security due in December 2010 fell 3 cents to C$101.53. ``Supply concerns are an issue,'' said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. ``The U.S. government announced a massive refunding effort in Treasuries. The increased supply in the U.S. would also spill over and affect Canadian bond markets.'' The 10-year note's yield was little changed at 3.75 percent. The price of the 4.25 percent security maturing in June 2018 fell 1 cent to C$103.96. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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