Canada’s dollar dropped to a two-week low versus the greenback as concern the global economy is slowing reduced demand for higher-yielding assets. Canada’s 30-year bond yield fell for the sixth straight day, sliding to a record low 3.16 percent, according to Bloomberg data beginning in December 1990. The Canadian currency slid against the yen and Swiss franc as stocks declined on an unexpected reduction in U.S. consumer spending. President Barack Obama signed legislation to raise the debt ceiling after it was passed by Congress. “Global growth concerns have re-emerged in the markets,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network. “Any time we see weaker-than-expected U.S. indicators, that tends to cause the loonie to fall in sympathy.” The Canadian currency weakened 0.5 percent to 96.13 cents per U.S. dollar at 5 p.m. in New York, from 95.70 cents yesterday. It touched 96.19, the weakest level since July 18. One Canadian dollar buys $1.0403. The loonie, as the currency is also known, remained lower as Canadian Finance Minister Jim Flaherty said the U.S. and Europe should refrain from “draconian” measures to curb their deficits that could undermine the recovery. Flaherty, speaking to reporters in Mississauga, Ontario, said the U.S. needs a “medium-term” plan for debt control to bolster investor confidence. U.S. Debt Accord Obama signed the debt-limit compromise preventing a default on the day the Treasury had warned the nation’s borrowing authority would expire. The Senate voted 74-26 for the measure, which raises the debt ceiling until 2013 and threatens automatic spending cuts to enforce $2.4 trillion in spending reductions over the next 10 years. The House passed the plan yesterday. The Standard & Poor’s 500 Index fell 2.6 percent, while the S&P/TSX Composite Index decreased 1.5 percent. Futures on crude oil, Canada’s biggest export, dropped 1.7 percent to $93.26 a barrel after sliding 0.9 percent yesterday. The price of the 4 percent Canadian bond maturing in June 2041 increased C$2.36 to C$116.03. The yield was down 11 basis points, or 0.11 percentage point, to 3.17 percent after touching the record low. “Canadian bonds in the long end are basically trading in tandem with what’s going on in the U.S.,” said Dean Popplewell, head analyst at the online currency trader Oanda Corp. in Toronto. “The market’s starting to question the potential of further austerity measures being implemented by the Federal Reserve, and investors are gravitating toward longer ends of the yield curves, where they can actually grab some yield.” Bond Yields The U.S. 30-year bond yields fell as much as 18 basis points to 3.90 percent, the most on an intraday basis since May 2010. America’s 10-year note yields touched 2.60 percent, the lowest level since November, when the central bank started its $600 billion round of Treasury purchases to keep borrowing costs low, a program that ended in June. The greenback rallied today against most of its major counterparts tracked by Bloomberg as investors sought refuge from a slowing global economy. Consumer spending in the U.S., Canada’s biggest trading partner, unexpectedly dropped in June for the first time in almost two years, the Commerce Department reported. Purchases decreased 0.2 percent after a 0.1 percent gain in the prior month. The median estimate of 77 economists surveyed by Bloomberg News was for a 0.1 percent increase. Reports on Payrolls U.S. payrolls climbed by 85,000 workers last month after an increase in June of 18,000, the smallest this year, according to the median forecast of 81 economists in a Bloomberg News survey before the Labor Department’s report Aug. 5. “The market is obviously concerned about the employment numbers,” Popplewell said. “They are expected to be slightly on the soft side, and the market is happily applying risk-averse trading strategies.” Canadian employers added fewer net jobs in July than in the prior month, according to the median forecast of 26 economists before the report from Statistics Canada, also on Aug. 5. To contact the reporters on this story: Joe Ragazzo in New York at jragazzo@bloomberg.net; Chris Fournier in Halifax at cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka dliedtka@bloomberg.net

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