Canada’s dollar fell for a third straight day as slowing economic growth concern discouraged demand for higher-yielding assets. The International Monetary Fund cut Canada’s economic growth forecast yesterday to 2.1 percent for this year from 2.9 percent, citing weaker demand from the U.S., the nation’s biggest trade partner, and slower government spending. The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, briefly pared its drop after a government report showed the annual rate of inflation was higher in August than economists forecast. “Growth concerns trump a bit of inflation at this point,” said David Love, a trader of interest-rate derivatives at the brokerage Le Groupe Jitney Inc. in Montreal, in an e-mail. “The European debt crisis is still forefront in most people’s minds. We have oil lower, and equities are a bit softer.” The Canadian currency depreciated 0.4 percent to 99.63 cents per U.S. dollar at 8:06 a.m. in Toronto. The three-day losing streak is the longest since the period ended Aug. 8. One Canadian dollar buys $1.0037. Futures on crude oil, Canada’s biggest export, decreased 0.8 percent to $86.24 a barrel as investors bet that fuel demand in the U.S. is waning. The Euro Stoxx 600 Index declined 1 percent. Inflation Reading Canadian consumer prices advanced 3.1 percent in August from a year earlier after a 2.7 percent gain the previous month, Statistics Canada said today in Ottawa. The median forecast of 26 economists in a Bloomberg News survey was for a 2.9 percent annual pace. “Although headline inflation remains well above the Bank of Canada’s 2 percent target, don’t expect a tighter stance on monetary policy anytime soon, especially since the bank views risks to the economy as skewed to the downside,” wrote Krishen Rangasamy, senior economist at National Bank in Montreal, in a note to clients. Bank of Canada Governor Mark Carney said yesterday in Saint John, New Brunswick, that borrowing costs may stay low beyond when full output is restored. He said the domestic recovery will be hobbled by a weak U.S. economy. Speculation that the central bank will raise its benchmark overnight target rate from 1 percent this year has faded on concern the global economy may be headed for a recession, crimping Canadian exports. The central bank on Sept. 7 kept its main interest rate unchanged for an eighth meeting and said there is a “diminished” need for an increase as Europe’s fiscal crisis and a slow U.S. rebound hobble the global recovery. Canada’s economy, the world’s 10th largest, shrank at a 0.4 percent annualized pace in the second quarter, the national statistics agency said Aug. 31. It was the first contraction since the recession two years ago. To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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