The Canadian dollar fell against its U.S. peer on bets it appreciated too far, too fast yesterday before data forecast to show Canada’s trade balance swung to a deficit in April. The currency dropped against the majority of its most-traded peers before a report projected to show Canada had an international merchandise trade deficit of C$500 million ($485 million) in April after posting a C$20 million surplus the previous month, according to a Bloomberg survey of 24 economists. The Canadian dollar posted its biggest gain in almost a year yesterday as a weaker-than-forecast reading on U.S. manufacturing damped speculation the Federal Reserve will reduce stimulus that tends to devalue the currency. “This is just a rebound,� said Jane Foley, senior currency strategist at Rabobank International by phone from London. “The market now is really on the cusp of trying to decide whether the Fed is going to taper soon or whether it’s not. Our view is that the Fed probably won’t taper until later in the year, meaning the market probably is overexcited and probably has gotten ahead of itself.� The loonie, as the Canadian dollar is known, fell 0.4 percent to C$1.0321 per U.S. dollar at 8:12 a.m. in Toronto. The currency added as much as 1.1 percent yesterday, the biggest gain since June 29, 2012. One loonie buys 96.91 U.S. cents. 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

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