Canada’s dollar dropped as the greenback rose on safety demand on concern about the European debt crisis in the wake of last week’s U.S. payroll data that trailed even the most bearish forecast. Canada’s currency weakened as much as 0.5 percent against the U.S. dollar. It reached the strongest since April 1 against the euro after rising Italian bond yields fueled concern Europe’s sovereign debt crisis is worsening. “If people are getting really nervous about the U.S. again, then you would expect the U.S. dollar to rally a little bit versus the Canadian dollar,” said Tom Levinson, a foreign- exchange strategist at ING Bank NV, by phone from London. “Such was the negative response to the payrolls number that it broadened out general risk aversion.” The Canadian currency weakened 0.7 percent to 96.95 cents per U.S. dollar at 8:18 a.m. in Toronto, compared with 96.27 cents on July 8. It rose 0.8 percent to C$1.3632 per euro from C$1.3745. One Canadian dollar buys $1.0315. The loonie, as the nation’s currency is also known for the image of the common loon on the dollar coin, rose to as high as 94.46 cents versus the greenback on April 29, the strongest in more than three years before successive indications of softening U.S. economic growth drove it to as low as 99.13 cents on June 27. Canada ships about three quarters of its exports to the U.S. Rally Hold The rally in the Canadian dollar since reaching the June 27 low “has held in there pretty well,” Levinson said. The loonie weakened July 8 as U.S. employers hired 18,000 workers in June, less than forecast and the fewest in nine months, while the unemployment rate unexpectedly climbed, boosting concern that the U.S. economy is struggling. “With Canada they’re kind of brushing off this labor report in the U.S. whereas everywhere else seems to have reacted pretty negatively to it,” Levinson said. “We still take the view that U.S. data will steadily improve throughout the rest of this year and that will contribute to better prospects for Canada as well.” Canadian housing starts were 197,400 at a seasonally adjusted annual pace in June, Canada Mortgage & Housing Corp. said on its website today. Economists forecast a reading of 185,000 according to the median of 18 responses to a Bloomberg News survey. 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

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