BS: The Canadian Dollar Falls With No U.S. Budget Deal
The Canadian dollar fell against the majority of its most traded peers on concern U.S. budget talks will fail to avert spending cuts and tax increases that threaten to push the nation’s largest trading partner into a recession.
The Canadian currency was little changed against its American counterpart after the U.S. Congress recessed for the Christmas holiday with only a week left to negotiate a deficit- cutting plan to avoid the automatic budget cutting measures set to take effect Jan. 1. Even with the U.S. budget debate, figures released late last week show traders remain optimistic on the longer-term prospects of the Canadian currency.
“Friday’s CFTC data suggested there was build in the net- long CAD position, so still sentiment is bullish,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia, by telephone from Toronto. “However, the very-near-term risk is certainly fiscal-cliff negotiations, and then the holiday-type less-liquid markets.”
The loonie, as the Canadian currency is known for the image of the aquatic bird on the C$1 coin, was little changed at 99.33 cents per U.S. dollar at 8:08 a.m. in Toronto. One loonie buys C$1.007.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the Canadian dollar compared with those on a drop -- so-called net longs -- was 74,278 on Dec. 18, compared with net longs of 62,533 a week earlier, figures from the Washington-based Commodity Futures Trading Commission showed Dec. 21.
To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
