Canada’s dollar fell the most in more than a week as stocks plunged on concern the global economy is slowing, damping demand for riskier assets. The currency extended its monthly loss versus the greenback before a report tomorrow forecast to show Canada’s annual rate of inflation slowed in July. The yield on the Canadian government bond dropped to a record low 2.254 percent. Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty are scheduled to brief lawmakers tomorrow on the economy. “The catalyst is coming from ongoing uncertainty in global markets,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada, by phone from Toronto. “Equities are lower, as the yen and the U.S. dollar are higher. The Canadian dollar is following the flow.” The Canadian currency weakened 1.2 percent to 99.17 cents per U.S. dollar at 10:38 a.m. in Toronto, compared with 98.07 cents yesterday. It’s headed for a 3.7 percent loss in August, the most since June 2009. One Canadian dollar purchases $1.0084. Government bonds rallied, with 10-year yields dropping 11 basis points, or 0.11 percentage point, to 2.27 percent after touching the lowest level since the beginning of records in 1989. The price of the 3.25 percent securities maturing in June 2021 gained C$1.03 to C$108.53. The Standard & Poor’s 500 Index dropped 4.3 percent. Crude oil for September delivery tumbled 4.8 percent to $83.38 a barrel in New York trading. The S&P/TSX Composite Index decreased 2.4 percent. Canadian Inflation Canadian consumer prices rose 2.8 percent in July from a year earlier after a 3.1 percent gain in the previous month, according to the median forecast of 23 economists in a Bloomberg News survey. Statistics Canada releases the report at 7 a.m. tomorrow in Ottawa. “Canada will be looked at tomorrow in light of CPI, and Carney testifying before parliament,” said National Bank’s Spitz. “The fact that futures markets have priced in rate cuts rather than hikes will be scrutinized.” First-time jobless claims in the U.S. climbed in the week ended Aug. 13 to 408,000, the highest level in a month, Labor Department figures showed. Consumer prices excluding food and fuel costs increased 0.2 percent in July, the slowest pace since April, the Labor Department also reported. The U.S. is Canada’s biggest trading partner. In the U.S., Federal Reserve Bank of New York President William C. Dudley said the central bank always keeps an eye on the performance of U.S. and foreign banks, not monitoring one group more than the other. The Fed is “always scrutinizing” domestic and foreign banks in terms of capital levels, Dudley, 58, said in response to audience questions after a speech today in Newark, New Jersey. 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

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