Canada’s dollar dropped to the weakest level in more than a year as investors sought the safety of its U.S. counterpart amid concern that European officials may fail to forestall a spiraling sovereign-debt crisis. The Canadian currency lost 5.1 percent last week, the most since the aftermath of the bankruptcy of Lehman Brothers Holdings Inc. in 2008. Treasury Secretary Timothy F. Geithner said failure to address the debt crisis that began in Greece 18 months ago may prompt investors to pull money from banks. “What matters is what transpires in Europe,” Camilla Sutton, director of currency strategy at Bank of Nova Scotia, Canada’s third-largest lender, said by phone from Toronto. “Analysts now have a unified view of what needs to be done -- a bigger aid package, bank recapitalization and a framework for an orderly default by Greece. The question is, can that be delivered?” The Canadian currency lost 0.7 percent to C$1.0350 per U.S. dollar at 12:15 p.m. in Toronto, compared with C$1.0281 at the end of last week. It touched C$1.0386 today, the weakest since Sept. 9, 2010. One Canadian dollar buys 96.62 U.S. cents. The loonie briefly reversed its retreat amid speculation its losses last week couldn’t be sustained. The 14-day relative strength index for the loonie versus the U.S. currency declined to 26.9, falling below 30 for a third straight day. A reading lower than 30 signals that an asset may be due for a rebound. Struggling on Crisis The U.S. currency rose versus the New Zealand dollar, Brazil’s real and Mexico’s peso, higher-yielding currencies, and the euro slumped to a decade low versus the yen on speculation that European policy makers are struggling to resolve the debt crisis. Finance ministers and central bankers who held weekend talks in Washington urged European officials to intensify efforts to contain it as Greece teetered on the edge of default. “If European officials don’t do something sensible, then we do start talking about Lehman-type scenarios,” said David Watt, senior currency strategist at Royal Bank of Canada, the nation’s biggest bank, by phone from Toronto. Canada’s government bonds dropped for a second day, pushing yields on benchmark 10-year debt higher by six basis points, or 0.06 percentage point, to 2.13 percent. They fell to a record low 1.994 percent on Sept. 23 as investors sought the safety of sovereign securities. The price of the 3.25 percent securities due in June 2021 tumbled 57 cents to C$109.70. Loss This Year The loonie has lost 3.8 percent this year versus nine developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes. Only the Australian dollar has performed worse, declining 5.3 percent. The economies of both nations rely on exports of raw materials. Speculators lowered bets on rising commodities prices by the most in 19 months as raw materials tip into their first bear market since 2008 and investors anticipate more losses. Money managers cut the combined net-long position across 18 futures and options by 20 percent in the week ended Sept. 20, the most since February 2010, data from the U.S. Commodity Futures Trading Commission show. 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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