BLBG: Canada’s Dollar Depreciates as Crude Oil Falls for Third Day, Stocks Drop
Canada’s dollar weakened versus its U.S. counterpart as declines in crude oil, the nation’s biggest export, and equities dimmed the appeal of currencies tied to global economic growth.
The Canadian currency rose the most yesterday on an intraday basis in two months, rallying with other risk-sensitive assets, on optimism officials will succeed in containing the European sovereign debt crisis. The currency was among the weakest performers today versus the greenback.
“Looking across the majors, performance is fairly consistent today with a defensive tone overall,” said Ned Rumpeltin, head of Group of 10 currency strategy at Standard Chartered Bank in London, by e-mail. “In the context of the big recovery we’ve seen in the last few days, a modest pullback is fairly natural at this stage. Given the Canadian dollar is sensitive to risk appetite, it should trade in line with that overall dynamic.”
The Canadian currency fell 0.5 percent to C$1.0220 per U.S. dollar at 8:33 a.m. in Toronto. It’s headed for a 1.5 percent gain this week. One Canadian dollar buys 97.89 U.S. cents.
Rumpeltin predicted the currency will strengthen to 96 cents per U.S. dollar in a year.
Trade Trend
Canada’s merchandise trade deficit was narrower than economists forecast in August as exports and imports both rose, government figures showed.
The deficit of C$622 million ($609 million) in August was smaller than the C$1 billion median estimate in a Bloomberg survey with 22 responses. Statistics Canada today also reduced its estimate of July’s deficit to C$539 million from an earlier figure of C$753 million.
Oil dropped for a third day in New York as signs of weakening U.S. gasoline demand and slowing crude imports in China stoked speculation that consumption will falter in the world’s largest energy users.
Crude for November delivery on the New York Mercantile Exchange declined 0.6 percent.
“Softer oil prices will be enhancing the downside potential for the Canadian dollar,” Jane Foley, a senior currency strategist at Rabobank International in London, said by e-mail. “The U.S. imports more oil from Canada than any other country.”
Futures on the Standard & Poor’s 500 Index indicated the stock gauge would open 0.5 percent lower.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
