Canada’s dollar pared its loss after touching its lowest level since March as crude oil erased a decline, reviving demand for higher-yielding assets. The loonie, as the Canadian currency is known for the image of the aquatic bird on the C$1 coin, got a boost as the Standard & Poor’s 500 Index rose 0.3 percent after earlier falling by the same amount. The Canadian dollar was headed for a fourth weekly loss, dropping 0.4 percent since May 20. “The market is starting to look a little bit better pro- risk,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “Dollar-Canada is turning around with everything else.” The currency dropped 0.1 percent to 97.74 cents versus the U.S. dollar at 5 p.m. in Toronto, compared with 97.67 yesterday, after touching 98.16, the weakest level since March 28. One Canadian dollar buys $1.0231. Canada sold C$3 billion ($3.1 billion) of three-year bonds today, drawing an average yield of 2.037 percent. The government received bids of C$8.3 billion for the 2.25 percent securities maturing in August 2014, according to a statement on the Bank of Canada’s website. The current three-year bond yield decreased two basis points, or 0.02 percentage point, to 1.91 percent. The 2 percent security maturing in March 2014 increased 6 cents to C$100.25. Futures on crude oil, Canada’s biggest export, gained 1.6 percent to $101.18 a barrel in New York after earlier decreasing as much as 1.4 percent. The MSCI World Index of equities rose 0.3 percent after falling as much as 0.4 percent. Slowing Growth The loonie touched the lowest level in almost two months today on signs of slowing economic growth and reduced speculation that the Bank of Canada will resume increasing borrowing costs. “As a result of the weak data and low expectations for any change whatsoever in the Bank of Canada, you’re definitely seeing this weigh on the Canadian dollar,” said John Curran, a senior vice president in Toronto at CanadianForex Ltd., an online foreign-exchange dealer. Canada’s inflation slowed last month more than economists forecast, and retail sales stalled in March, according to economic reports last week, adding to speculation the Bank of Canada won’t raise its target rate for overnight lending between banks at its May 31 meeting. The central bank will leave its benchmark lending rate unchanged at 1 percent, according to Curran, where it has been since September. Investors should buy the Canadian dollar against the yen on speculation the Bank of Canada will raise interest rates this year, according to Nomura Holdings Inc. Nomura on Loonie “We have been accumulating yen shorts in recent weeks, and we are adding long Canadian dollar-yen exposure, in order to broaden yen shorts further,” Jens Nordvig, global head of G-10 currency strategy at Nomura in New York, said via e-mail. A short position is a bet an asset will decline. Nomura recommends buying Canada’s dollar at about 83.65 yen, with a target of 87 to 88 and a stop-loss order at 82. A stop loss is an automatic instruction to exit a trade if a bet goes the wrong way. Canada’s dollar was little changed at 83.87 yen, compared with 83.91 yesterday. Canadian Finance Minister Jim Flaherty said he will present a budget on June 6 that will contain all the measures that were in the March 22 proposal, including C$7.6 billion in new spending and tax credits, and said he will seek to eliminate the country’s deficit in the fiscal year that begins April 2014, a year earlier than previously forecast. Flaherty spoke to reporters in Ottawa. To contact the reporter for this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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