BLBG: Canadian Dollar Weakens a Fourth Session as U.S. Dollar Climbs
Canada’s dollar fell for a fourth consecutive day as the U.S. dollar strengthened against most currencies, boosted by investors seeking a haven against a deteriorating global economy.
“An insatiable demand for U.S. dollars,” is pushing other currencies including Canada’s lower, said Shaun Osborne, chief foreign-exchange strategist at TD Securities Inc. in Toronto. “The market has ignored the shockingly weak retail sales data and is focusing on euro-zone sovereign credit issues, driving the U.S. dollar generally higher.”
The Canadian dollar declined 1 percent to C$1.2371 per U.S. dollar at 10:02 a.m. in Toronto, from C$1.2243 yesterday. It touched C$1.2373, the weakest since Dec. 16. One Canadian dollar buys 80.83 U.S. cents.
The U.S. dollar rose against all but 3 of the 16 most actively traded currencies, the exceptions being the Japanese yen, the British pound and South Korea’s won.
Greece had its sovereign credit rating lowered one step by Standard & Poor’s, which cited the country’s weakening finances. The economic slowdown also threatens credit ratings in Ireland, Portugal and Spain, according to the ratings company.
Sales at U.S. retailers fell 2.7 percent in December, the sixth consecutive drop and more than twice as much as forecast, the Commerce Department said. Purchases excluding automobiles slumped 3.1 percent.
Canada’s currency will depreciate to C$1.25 against the U.S. dollar by the end of this quarter, according to the median forecast in a Bloomberg News survey of 35 economists. RBC Capital predicts the currency will weaken to C$1.31 by the end of the second quarter, while TD Securities anticipates it will trade at C$1.22 by then.
“U.S. dollar strength, global equity weakness and soft commodities -- that’s the story,” said Firas Askari, head currency trader in Toronto at BMO Nesbitt Burns, a unit of Bank of Montreal.
The MSCI World, a benchmark index for 23 developed markets, fell 2 percent to 871.78, the sixth consecutive decline. Europe’s Dow Jones Stoxx 600 Index dropped 3 percent. The Standard & Poor’s 500 Index slid 2.4 percent.
Crude oil for February delivery was little changed at $37.85 a barrel. The contract has lost 14 percent this year and has plunged more than $100 in six months. Crude accounts for about a tenth of export revenue.
“Trade data, commodity prices and the global economic outlook are all negative for the Canadian dollar,” said David Watt, a senior currency strategist in Toronto at RBC Capital Markets, unit of Canada’s biggest bank by assets.
The yield on the two-year government bond fell four basis points, or 0.04 percentage point, to 0.98 percent. The price of the 2.75 percent security due in December 2010 rose 8 cents to C$103.29.
