BLBG: Canada’s Dollar Falls as Stocks, Oil Decline on Risk Aversion
Canada’s currency fell for the first time in three days as investors favored the relative safety of the U.S. dollar and Japan’s yen over riskier assets such as commodity currencies.
“Equities are off, and crude is off,” said Firas Askari, head currency trader in Toronto at BMO Nesbitt Burns, a unit of Bank of Montreal.
The Canadian dollar weakened 1 percent to C$1.2875 per U.S. dollar at 7:39 a.m. in Toronto, from C$1.2731 yesterday, and lost 0.9 percent to 77.21 yen. The loonie, as the currency is known, touched C$1.2975 two days ago, the weakest level since Dec. 5. One Canadian dollar buys 77.82 U.S. cents.
European stocks and U.S. equity-index futures declined and crude oil fell after China’s Premier Wen Jiabao indicated the government doesn’t see a need to increase its economic stimulus and General Motors Corp. said auditors questioned its ability to continue as a going concern.
Canada’s dollar, which tends to track movements in equity and commodity prices, dropped 5.2 percent this year after declining a record 18 percent in 2008 as the global recession crimped demand for raw materials such as crude oil, lumber, copper and aluminum.
Europe’s Dow Jones Stoxx 600 Index slipped 2.2 percent, and Standard & Poor’s 500 Index futures lost 2.1 percent. Crude oil for April delivery fell as much as 3.8 percent to $43.65 a barrel in electronic trading on the New York Mercantile Exchange.
U.S. Dollar Gains
The U.S. dollar and yen outperformed all of the most actively traded currencies except Taiwan’s dollar. Australia’s dollar, another currency that tracks commodities, fell 1.4 percent to 64.08 U.S. cents.
The European Central Bank cut the main refinancing rate by a half-percentage point to 1.5 percent, a record low, to stem the worst recession since World War II.
Canada’s currency will strengthen to C$1.27 against the U.S. dollar by the end of the first half and C$1.23 by year-end, according to the median forecast in a Bloomberg News survey of 40 economists.
The yield on the two-year government bond fell three basis points, or 0.03 percentage point, to 0.94 percent. The price of the 2.75 percent security due in December 2010 increased 3 cents to C$103.10.
