BLBG: Canadian Dollar Touches Lowest Level in Almost Two Months as Crude Falls
Canada’s dollar touched its lowest level in almost two months as crude oil dropped, discouraging demand for currencies linked to commodities.
The loonie, as the Canadian currency is known for the image of the aquatic bird on the C$1 coin, has weakened 0.5 percent since May 20 and was headed for its fourth weekly decline. The drop has been fueled by signs of slowing economic growth and reduced speculation that the Bank of Canada will resume increasing borrowing costs.
“The Canadian dollar has been lagging its counterparts,” said John Curran, a senior vice president in Toronto at CanadianForex Ltd., an online foreign-exchange dealer. “As a result of the weak data and low expectations for any change whatsoever in the Bank of Canada, you’re definitely seeing this weigh on the Canadian dollar.”
The loonie pared its decline as crude oil losses were reduced. The currency traded at 97.75 cents versus the U.S. dollar at 9:58 a.m. in Toronto, compared with 97.67 yesterday, after touching 98.16, the weakest level since March 28. One Canadian dollar buys $1.0232.
A gain in Canada’s 10-year bond pushed the yield down two basis points, or 0.02 percentage point, to 3.09 percent. The price of the 3.25 percent security maturing in June 2021 increased 14 cents to C$101.39.
Futures on crude oil, Canada’s biggest export, dropped 0.2 percent to $99.40 a barrel. The MSCI World Index of equities was little changed after falling 0.4 percent.
‘Weakness in Canada’
“With the risk-off perspective, we’re seeing more weakness in Canada and strength in the dollar,” said C.J. Gavsie, managing director for foreign-exchange trading at Bank of Montreal’s BMO Capital Markets unit in Toronto.
Canada’s inflation slowed last month more than economists forecast, and retail sales stalled in March, adding to speculation the Bank of Canada won’t raise its target rate for overnight lending between banks at its May 31 meeting.
The central bank will leave its benchmark lending rate unchanged at 1 percent, according to Curran. The rate has been at that level since September.
To contact the reporter for this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
