June 25 (Bloomberg) -- Canada’s currency headed for its fourth consecutive weekly loss amid speculation a three-month rally went too far to be sustained and global growth is likely to remain subdued. “The Canadian dollar was evidently getting ahead of fundamentals,” said Krishen Rangasamy, an economist at CIBC World Markets Inc. in Toronto. “The global economy remains depressed.” The currency, which strengthened 19 percent between March 9 and the end of May, is the worst performer against the U.S. dollar this month among the 16 most-active currencies tracked by Bloomberg. Canada’s dollar, known as the loonie, fluctuated between gains and losses today and headed for a 1.7 percent drop for the week. It rose 0.3 percent to C$1.1546 per U.S. dollar at 5 p.m. in Toronto, from C$1.1576 yesterday. Earlier it fell as much as 0.5 percent, touching C$1.1638, the weakest since May 19. One Canadian dollar buys 86.61 U.S. cents. The loonie, which rose the most in May in almost six decades, is down 5.3 percent since reaching an eight-month high on June 1. The Bank of Canada’s governor, Mark Carney, warned at least twice this month that continued strengthening of the currency threatened the economy. ‘Dog With Fleas’ “The Canadian dollar is a dog with fleas,” said Steve Butler, director of foreign-exchange trading in Toronto at Scotia Capital Inc., a unit of Canada’s third-largest bank. “It has really been an underperformer of late.” Carney said in remarks in Washington on June 23 that the recession in Canada is now as deep as the U.S. slump. Canada’s gross domestic product will shrink 3 percent this year, the central bank predicts, the biggest drop since 1933. “The market seems to be taking comments by Carney to heart, both about the currency and about the state of the economy,” Butler said. Canada’s dollar will strengthen to C$1.13 by year-end, according to the median forecast of 37 economists and analysts surveyed by Bloomberg News. The loonie’s decline “should be running out of steam, with the commodity currencies picking up renewed support,” said Ian Stannard, a currency strategist in London at BNP Paribas SA. “The activity we’ve seen from central banks over the past couple of days is positive for risk appetite.” Raw materials including crude oil account for more than half of Canada’s export revenue. The Federal Reserve said in a policy statement yesterday it doesn’t plan to increase its purchases of bonds and that the pace of economic contraction in the U.S. is slowing. Still, it said, the economy “is likely to remain weak for a time.” Canadian Bonds Canada’s government bonds lost investors 2 percent this year, according to a Merrill Lynch & Co. index. The 10-year note’s yield fell three basis points today, or 0.03 percentage point, to 3.42 percent. The price of the 3.75 percent security maturing in June 2019 rose 28 cents to C$102.78. The Bank of Canada said today it extended its program of emergency purchases of securities from major bond dealers until at least the end of January 2010 and may offer more help if needed to ease credit markets. The central bank also said it would increase its bond program by 25 percent for the fiscal year from an initial projection of C$82 billion ($71 billion), with the “additional issuance distributed across all maturity sectors.”

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