Canada’s currency was headed for its first five-day drop in December as speculation Europe is struggling to contain its sovereign-debt crisis damped appetite for higher-yielding assets. The loonie, as the currency is also known, pared a gain earlier today as reports showed U.S. consumer prices stagnated last month and foreigners bought less in Canadian securities in October than forecast. Crude oil, the biggest Canadian export, and global equities were headed for weekly losses. “It hasn’t been a good week for the risk backdrop, with crude oil prices being hit pretty hard, which isn’t helping Canada,� said George Davis, chief technical analyst for fixed-income and currency strategy in Toronto at Royal Bank of Canada. “The risk backdrop has not been supportive now that people are more cautious with regards to the global growth outlook.� The loonie was little changed at C$1.0352 per U.S. dollar at 10:12 a.m. after reaching C$1.0424 on Dec. 14, the weakest since Nov. 28. One Canadian dollar buys 96.46 U.S. cents. The Canadian currency has fallen 1.7 percent this week. Foreigners bought a net C$2.03 billion ($1.97 billion) of Canadian securities in October, led by bonds, Statistics Canada figures showed today. Economists predicted a C$7.25 billion net investment, according to the median of four estimates gathered by Bloomberg News. Purchases slowed from C$7.35 billion in September. Canadian Bonds Yields on Canada’s benchmark 10-year bonds fell three basis points, or 0.03 percentage point, to 1.90 percent. The price of the 3.25 percent securities maturing in June 2021 increased 26 cents to C$111.66. The Standard & Poor’s 500 Index advanced 1.5 percent today, paring its weekly drop to 2 percent. The S&P/TSX Composite Index gained 1.2 percent, reducing its five-day decline to 3.3 percent. Crude oil futures gained 1.1 percent to $93.78 a barrel in New York and have dropped 5.4 percent this week. Consumer prices in the U.S., Canada’s biggest trading partner, were unchanged in November following a 0.1 percent decrease in the prior month, a report from the Labor Department showed today in Washington. The median forecast of 82 economists in a Bloomberg News survey was for an increase of 0.1 percent. The loonie has weakened 2.8 percent this year, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-nation currencies. The greenback has appreciated 1.7 percent, and the yen has added 4.8 percent. To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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