The Canadian dollar fell against most of its major peers with the Bank of Canada projected to keep interest rates low for more than a year amid signs of economic recovery in Europe. The currency tumbled to its weakest point in almost four years against the euro as some of the world’s largest investors put money into European bonds, which are expected to gain next year compared to forecast losses in North American debt. The Bank of Canada is not expected to raise its benchmark interest rate until the second half of 2015 as it waits for stronger global growth to aid the country’s exports, according to a Bloomberg survey of 16 economists. “The euro is on fire today,� said Brad Schruder, director of foreign exchange at Bank of Montreal, by phone from Toronto. “It could be a large money manager out of Europe that needs to rebalance, and in thinly traded markets you can see exaggerated moves.� The loonie, as the Canadian dollar is known for the aquatic bird on the C$1 coin, fell 0.2 percent to C$1.0666 per U.S. dollar at 8:21 a.m. in Toronto. One loonie buys 93.76 U.S. cents. The loonie dropped as much as 1.6 percent to C$1.4818 per euro, the lowest since February 2010. Yield forecasts for Spain and Italy, where borrowing costs soared to more than decade highs during the European debt crisis, indicate bond returns in 2014 will extend this year’s gains of as much as 11.1 percent, luring asset managers like Robeco Groep NV, Fidelity Investments and Amundi. Canada’s benchmark 10-year government bond fell, with yields rising four basis points, or 0.04 percentage point, to 2.75 percent. The 1.5 percent security maturing in June 2023 lost 29 cents to C$89.69. The losses are expected to continue next year, with the yield forecast to rise to 3.23 percent, according to the median estimate of 18 economists in a Bloomberg survey. 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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