BLBG: Canada's Dollar Falls From Six-Month High as Stock Drop Saps Risk Demand `
Canada’s dollar dropped from a six- month high against the greenback as North American stocks fell, indicating reduced risk appetite.
The loonie slid against half of its 16 most-traded counterparts tracked by Bloomberg as Group of 20 leaders convened in Seoul. The currency earlier traded stronger than parity with the greenback for a fifth day and touched the highest level against the euro in seven weeks on concern deficit levels in some European nations may spiral out of control.
“Equity futures pointing to a soft opening seem to be taking some shine off the Canadian dollar,” Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital Inc. unit, said via e-mail. “European sovereign worries sent the euro lower again today.”
The loonie depreciated 0.3 percent to C$1.0034 per U.S. dollar at 10:25 a.m. in Toronto, from C$1.0009 yesterday. It touched 99.78 Canadian cents, the strongest level since April 26. The Canadian dollar gained 0.4 percent to C$1.3735 against the euro after touching C$1.3721, the strongest since Sept. 22.
Foreign-exchange trading volume may be lighter than usual because bond markets are closed for Remembrance Day.
“With reduced staff across the board, G-20 vibrations is what will move” foreign-exchange markets, Firas Askari, head currency trader in Toronto at Bank of Montreal’s BMO Capital Markets unit, said via e-mail. “Liquidity is very poor.”
Harper at G-20
Canadian Prime Minister Stephen Harper told reporters in Seoul he’s doubtful G-20 leaders meeting there through tomorrow can resolve differences on how to tackle global currency and trade imbalances.
“We’re getting a more frank discussion on some of these matters,” Harper said. “Will they be addressed at this conference? I’m not so sure.”
The Standard & Poor’s 500 Index dropped 0.8 percent, while the S&P/TSX Composite Index slid 0.3 percent. Futures on crude oil, Canada’s biggest export, advanced 0.2 percent to $87.96 a barrel after rising to the two-year high of $88.63.
Portuguese and Irish government bonds fell on mounting concern some nations on Europe’s periphery will be forced to restructure debt. Irish 10-year securities plunged for a 13th consecutive day after the clearing house LCH Clearnet Ltd. demanded yesterday that its clients place a larger deposit when trading the debt.
“Sovereign concerns surrounding Ireland remain, with speculation of a Greece-style bailout in the cards for the Emerald Isle,” John Curran, senior vice president in Toronto at CanadianForex Ltd., an online foreign-exchange dealer, wrote in a note to clients. The U.S. dollar-Canadian dollar rate “remains within a tight range, reluctant to trade outside the C$1.0000 to C$1.0100 bounds for any length of time.”
Canada’s dollar will trade stronger than parity at 99 cents per U.S. dollar at the end of the first quarter of 2011 before weakening to C$1.04 by the end of next year, according to the median forecast of 31 economists and analysts in a Bloomberg News survey.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
