BS: Canada Dollar Declines Versus U.S. Peer as Oil Falls
Canada’s currency declined against its U.S. peer as crude oil tumbled for a third day amid skepticism global central banks can boost economic growth through monetary-stimulus measures.
The currency fell against the majority of its 16 most- traded counterparts after the U.S. Energy Department said crude- oil stockpiles rose 8.53 million barrels last week to 367.6 million, sending crude price down as much as 3.2 percent. Analysts surveyed by Bloomberg expected a gain of 1 million barrels. Japan’s announcement of further stimulus, following similar moves by the Federal Reserve and ECB, failed to spur the Canadian dollar, indicating the currency has peaked after touching a 13-month high last week.
“We’re seeing a marginal unwind of the Canadian dollar strength that had been put on following the Fed” and ECB stimulus measures, Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal (BMO), said in a phone interview. “The Canadian dollar weakened off against the U.S. dollar as risk appetite wanes. There are still some real issues in Europe -- the market continues to want Spain to formally request a bailout.”
The loonie, as the Canadian dollar is know for the image off the waterfowl on the C$1 coin, fell 0.1 percent to 97.54 cents per U.S. dollar at 10:49 a.m. in Toronto. One Canadian dollar buys $1.0252.
The currency touched 96.33 on Sept. 14, the strongest since August 2011, after the Fed announced further bond purchases to stimulate the economy of Canada’s largest trading partner.
Crude-oil futures fell 2.7 percent to $92.71 a barrel in New York after declines of 1.4 percent and 2.4 percent the previous two days.
Bonds Advance
Canadian government bonds advanced for a third day, the longest streak in three weeks, with the yield on the 10-year benchmark falling three basis points, or 0.03 percentage point, to 1.89 percent.
The Bank of Canada is auctioning C$1.4 billion ($1.4 billion) of 30-year bonds at noon. Two previous sales of the same amount of the securities this year yielded 2.41 percent in May and 2.79 percent in March. The yield on current 30-year bonds fell two basis points to 2.47 percent.
The Bank of Japan (8301) unexpectedly expanded its asset-purchase fund by 10 trillion yen (C$124 billion), as it sought to counter increasing danger of contraction in the world’s third-largest economy. The decision to ease policy was forecast by only five of 21 analysts surveyed by Bloomberg News.
The Japanese yen advanced against all major currencies, including the loonie.
There was limited reaction in the currencies after the announcement as “markets are clearly struggling to maintain the positive mental attitude that resulted from last week’s Fed stimulus announcement,” Greg Moore, currency strategist at Toronto-Dominion Bank (TD), said in a note to clients.
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
