BLBG: Canadian Currency Weakens for Second Day as Investors Shun Risk
Canada’s dollar depreciated for a second day as investors favored the U.S. dollar and Japan’s yen, traditional havens from risk, over higher-yielding assets such as stocks and commodity currencies.
The MSCI World Index, a gauge of equities in 23 developed nations, dropped and crude oil fell. The loonie, as the Canadian dollar is known, tends to trade as a proxy for risk appetite, tracking fluctuations in stocks and commodity prices.
“The risk trade is back off,” said Firas Askari, head currency trader in Toronto at BMO Nesbitt Burns, a unit of Bank of Montreal. “There’s a U.S. dollar rally across the board.”
The Canadian currency weakened 0.6 percent to C$1.2458 per U.S. dollar at 8:08 a.m. in Toronto, from C$1.2382 yesterday. It gained for four straight days last week as stocks rallied. One Canadian dollar buys 80.27 U.S. cents.
The U.S. dollar outperformed all but one of the 16 most- traded currencies, with the exception being the yen. The loonie depreciated less than the dollar of Australia and New Zealand, which also track changes in commodity prices. They fell 0.87 percent and 2 percent, respectively, against the greenback.
Canada’s currency will weaken to C$1.27 against the U.S. dollar by the end of this quarter, according to the median forecast in a Bloomberg News survey of 38 economists.
