BLBG: Canadian Dollar Drops to Lowest Since March as Commodities, Equities Fall
Canada’s dollar fell to its weakest level since March versus its U.S. counterpart as heightened risk aversion pushed commodities and global stocks lower.
The loonie, as Canada’s dollar is sometimes known, tumbled versus most of the 16 major currencies as crude oil dropped as much as 2 percent. Stocks and raw materials dropped as Greece prepared to plead today for a boost in its 110 billion-euro ($155 billion) bailout from European governments and the International Monetary Fund.
“It’s the usual risk-off story, with equities and commodities down,” Firas Askari, head currency trader at Bank of Montreal in Toronto, wrote via e-mail. “The Greece story is like the relative who won’t leave the room after he’s had too much to drink. We’ve seen selling of the Canadian dollar on the crosses,” he said, referring to non-U.S.-dollar trades.
The Canadian currency depreciated as much as 0.9 percent to 97.71 cents per U.S. dollar, the weakest level since March 29, before trading at 97.14 cents at 10:12 a.m. in Toronto, compared with 96.86 cents on May 13. One Canadian dollar buys $1.0294.
June futures on crude oil, Canada’s biggest export, slid as much as $1.98 to $97.67 a barrel in New York before trading at $99.04, down 0.6 percent. Copper from July delivery fell as much as 0.9 percent. The MSCI World Index of stocks in developed nations lost 03 percent in a fourth consecutive decline.
The talks on Greece will be clouded by the arrest of IMF Managing Director Dominique Strauss-Kahn for an alleged sexual attack on a female maid at a New York hotel.
Carney Speech
The Canadian dollar will trade “for the next little while” in a range of parity with the greenback plus or minus 5 cents, Askari said. Traders are waiting for a speech from Bank of Canada Governor Mark Carney today and inflation data from Statistics Canada later this week before taking stronger positions in the currency, he said.
Carney is due to speak at the Canada Club of Ottawa, according to the central bank’s Web site. His remarks on “Canada in a Multi-Polar World” will be available on the Web site at 12:45 p.m. New York time.
The central bank meets on May 31 to determine interest rates. Traders will be watching for “any hints of an earlier move,” Askari said. Fluctuations in overnight index swaps imply a chance of less than 10 percent the bank will raise its key lending rate from 1 percent at its next gathering, according to Bloomberg data.
Inflation Quickens
Inflation accelerated in April, with the consumer price index quickening to an annualized 3.4 percent pace, Statistics Canada will say on May 20, according to the median forecast of 27 economists. The report is due at 7 a.m. in Ottawa.
The loonie reached 94.46 cents per U.S. dollar on April 29, the strongest level since November 2007, as crude oil climbed over $114 a barrel. Canada is the largest supplier of crude to the U.S., the world’s biggest economy.
Canadian factory sales posted a widespread gain in March led by aerospace. Sales rose 1.9 percent to C$47.5 billion on a seasonally adjusted basis following a revised decline of 1.8 percent in February, Statistics Canada said today in Ottawa. Economists in a Bloomberg News survey predicted a 1.8 percent increase, based on the median of 23 estimates.
To contact the reporter on this story: Chris Fournier in Halifax, Nova Scotia at cfournier3@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
