Canada’s dollar weakened by the most since June 15 after Japan sold its currency to stem gains that threatened the nation’s economic recovery, driving the greenback higher against all of its major counterparts. The Canadian currency fell to the lowest since July 12 before a government report tomorrow that economists predict will show the nation’s employers added jobs for a fourth straight month. An index of stocks in developed nations dropped for a seventh day and crude oil, Canada’s biggest export, fell below $91 a barrel. “The Canadian dollar is really caught up in the crossfire of other moves in the majors until we get to the employment numbers tomorrow,” said Adam Cole, head of global currency strategy at Royal Bank of Canada, by phone from London. “The markets are becoming more negative on risk. That will push dollar-Canada higher,” he said, meaning the U.S. dollar will climb. The Canadian currency fell as much as 1.3 percent before trading 1 percent weaker at 97.17 cents per U.S. dollar at 10:29 a.m. in Toronto, compared with 96.21 cents yesterday. One Canadian dollar buys $1.0291. The yen fell more than 4 percent against the dollar, the biggest drop since a 6.1 percent decline on Oct. 28, 2008, and surpassing the 3.9 percent drop at the previous intervention on March 18. The Bank of Japan followed its Swiss counterpart in easing monetary policy, with Finance Minister Yoshihiko Noda saying the Japanese action was unilateral following joint yen sales by Group of Seven nations in March. ‘New Lows’ “For the time being, they’ll probably achieve their objective of trapping it into a range,” RBC’s Cole said, referring to the yen. “The overwhelming risk longer term is that dollar-yen does go back to new lows.” Government bonds rose, pushing the yield on Canada’s benchmark 10-year note six basis points lower to 2.61 percent. A basis point is 0.01 percentage point. The 3.25 percent security maturing in June 2021 increased 50 cents on the dollar to C$105.53. Canada’s currency fell versus about half of its 16 most- traded counterparts today as the MSCI World (MXWO) Index, a measure of stocks in developed nations, tumbled more than 2 percent. Oil dropped to a five-week low, easing all of this year’s gains. Crude for September delivery declined as much as 1.8 percent to $90.25 a barrel in electronic trading in New York. “In this environment, and absent any domestic data, we would expect the Canadian dollar to continue to underachieve,” Shaun Osborne and Jacqui Douglas, currency strategists at Toronto-Dominion Bank’s TD Securities unit, wrote in a note to clients. “Key resistance for funds stands at 98.14 cents, where the 200-day moving average, which has provided solid resistance since September last year, resided.” Resistance refers to the upper boundary of a trading range, in this case for the U.S. dollar versus the Canadian dollar, where sell orders may be clustered. To contact the reporter on this story: Chris Fournier in Halifax, Nova Scotia, at cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Source