BLBG: Canada’s Dollar Weakens on Oil’s Drop, ‘Political Shenanigans’
By Chris Fournier
Dec. 4 (Bloomberg) -- Canada’s currency fell the most in two weeks as oil prices dropped to the lowest in almost four years and the prime minister prepared to meet the governor general in a bid to save his seven-week-old government.
Crude oil’s decline “doesn’t help, nor do the political shenanigans,” said David Watt, a senior currency strategist at RBC Capital Markets in Toronto. “There are more than enough ingredients for some drama without the need for the folks in Ottawa to kick up a fuss.”
The Canadian dollar dropped as much as 1 percent to C$1.2646 per U.S. dollar, from C$1.2521 yesterday. It traded at C$1.2627 at 7:53 a.m. in Toronto. One Canadian dollar buys 79.20 U.S. cents.
RBC Capital predicts the Canadian dollar will weaken to C$1.27 by year-end.
Crude oil for January delivery dropped as much as $1.49, or 3.2 percent, to $45.30 a barrel on the New York Mercantile Exchange. That’s the lowest since Feb. 9, 2005. Crude oil accounts for about a tenth of Canada’s export revenue.
Canadian Prime Minister Stephen Harper said last night in a televised address he’ll do everything he can to prevent an opposition coalition from bringing down his Conservative Party government.
Harper, 49, whose party was re-elected on Oct. 14 with the country’s third straight minority government, may ask governor general Michaelle Jean to suspend the legislature.
“The uncertainty is not good for the Canadian dollar,” said Steven Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. “The politicians need to be focused on the economy, not a power struggle.”
Since the two largest opposition parties agreed Dec. 1 to form a coalition to accelerate a stimulus package for the economy, Canada’s dollar has weakened 1.7 percent.
Statistics Canada and the U.S. Labor Department are due to release employment data tomorrow. Canadian employers shed 25,000 jobs in November, according to the median forecast of 21 economists surveyed by Bloomberg News.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
