BLBG: Canada’s Dollar Little Changed as Stocks, Commodities Decline
Canada’s currency was little changed as its U.S. counterpart strengthened and stocks and commodities fell after yesterday’s rallies.
The U.S. dollar rose against 12 of the 16 most-actively traded currencies tracked by Bloomberg. The Standard & Poor’s 500 Index slid 1.4 percent, following a 7.1 percent advance yesterday that began when the U.S. Treasury announced a plan to finance as much as $1 trillion in purchases of distressed assets from banks.
“Today’s trading is largely driven by a pause after yesterday’s equity-market flourish,” said David Watt, a senior currency strategist in Toronto at RBC Capital Markets. “People are having a little morning-after realization.”
Canada’s currency, known as the loonie, traded at C$1.2230 per U.S. dollar at 10:30 a.m. in Toronto, from C$1.2217 yesterday. It fell earlier as much as 0.6 percent, the most since March 12. One Canadian dollar buys 81.76 U.S. cents.
Crude oil futures for May declined as much as 2.5 percent, and the Reuters/Jefferies CRB Index of 19 raw materials fell for the first time in four days, losing 0.9 percent. Commodities account for about half Canada’s export revenue.
The U.S. plan to help banks spurred investor appetite for higher-yielding assets yesterday, boosting stocks and commodities and pushing the greenback down against most of its major counterparts. The plan will use $75 billion to $100 billion of the Treasury’s bank-rescue funds and rely on Federal Reserve financing and Federal Deposit Insurance Corp. guarantees.
‘Wow Factor’
“The U.S. has announced a 1-2-3 punch that is generating a wow factor that suggests it is getting ahead of the expectations curve,” analysts led by Marc Chandler, global head of currency strategy in New York at Brown Brothers Harriman & Co., wrote in a research note today. “The U.S. dollar’s general resilience remains impressive. These last few days in March may go down in history as an important turning point in the crisis.”
The yield on the two-year government bond rose three basis points, or 0.03 percentage point, to 1.05 percent. The price of the 2.75 percent security due in December 2010 fell 5 cents to C$102.82.
