BS: Canada Dollar Fluctuates as Oil Falls on Concern Growth Slowing
Canada’s dollar fluctuated versus its U.S. peer as crude oil declined for a second day on speculation global growth is slowing, damping demand for higher- yielding assets and commodities.
The loonie, as the currency is nicknamed for the image of the waterfowl on the C$1 coin, fell the prior two days after touching a 13-month high on Sept. 14. The Reserve Bank of Australia warned today of slowing growth in China, falling commodity prices and a global economy still “subject to significant downside risks.”
“Market participants are concerned that there hasn’t been a policy response from China,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS) in Toronto, said in a phone interview. “With no policy response from China, does that mean the commitment to engineer a soft landing from China is waning?”
The Canadian dollar rose 0.1 percent to 97.41 cents per U.S. dollar at 11:17 a.m. in Toronto. One Canadian dollar buys $1.0266. The loonie has added 4.5 percent this year.
Canadian bonds advanced for the second day, with the yield on the 10-year benchmark falling four basis points, or 0.04 percentage point, to 1.90 percent. The 2.75 percent security maturing in June 2022 rose 43 cents to C$107.53.
Crude-oil futures dipped 0.2 percent to $96.45 a barrel in New York after tumbling 2.4 percent yesterday, including a $4 fall in three minutes before the expiry of October options contracts. Oil is Canada’s largest export.
Canadian companies are likely to take advantage of a risk appetite renewal among investors worldwide, pushing corporate debt issuance toward a record high this year.
Royal Bank of Canada and Bank of Montreal (BMO), the first and fourth largest underwriters of corporate debt this year, estimate that Canadian companies and banks will raise C$20 billion ($20.5 billion) of bonds in the final four months of 2012.
To contact the reporter on this story: Katia Dmitrieva in New York at edmitrieva1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
