The Canadian dollar fell versus most major peers amid bets the country’s economy may have failed to create as many jobs in July as economists forecast after a report last week showed U.S. payrolls grew less than projected. The currency traded at almost a two-week low versus the U.S. dollar as commodities including oil, Canada’s biggest export, sank and stocks declined. The nation’s government bonds fell. Economists in a Bloomberg survey estimated an Aug. 9 report will show the nation added 10,000 jobs after dropping 400 in June. The U.S. economy created 162,000 jobs in July, versus an estimate of 185,000. “All eyes this week are on the employment number in Canada,� said Blake Jespersen, managing director of foreign exchange at Bank of Montreal, by phone from Toronto. “Maybe markets are expecting a slightly weaker number after the disappointment in the U.S.� The loonie, as the Canadian currency is nicknamed for the image of the aquatic bird on the C$1 coin, depreciated 0.2 percent to C$1.0378 per U.S. dollar at 10:47 a.m. in Toronto. It reached C$1.0403 on Aug. 2, the weakest level since July 18. One Canadian dollar buys 96.36 U.S. cents. The benchmark 10-year government bond fell, pushing the yield up five basis points, or 0.05 percentage point, to 2.53 percent. The yield touched 2.6 percent on Aug. 2, the highest since August 2011. The price of the 1.5 percent security due in June 2023 lost 38 cents today to C$91.07. Trade Deficit The Canadian currency remained lower as data showed the nation’s trade deficit narrowed in June from a May total that was larger than previously estimated. The gap was C$469 million ($453 million), down from a revised C$781 million the prior month, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg forecast the deficit would be C$510 million, from a previously estimated $300 billion in May. The nation’s economy is being weighed down by what the Bank of Canada calls the slowest export recovery since World War II, hampered by a strong currency and a lack of corporate competitiveness. The May trade gap was the 18th in a row and extends the longest streak of deficits in a quarter-century. “The trade deficit is just a function of relative strength in the currency,� said Aaron Fennell, a futures specialist at Bank of Nova Scotia’s Scotia McLeod unit, by phone from Toronto. “With the soft Canadian dollar, it sort of moderates it itself, it’s kind of like a shock absorber.� Risk Reversal The cost to insure against declines in the Canadian dollar versus its U.S. peer increased to the highest level in almost a month. The three-month so-called 25-delta risk reversal rate rose to 1.5 percent, the most on a closing basis since July 8. Risk reversals measure the premium on options contracts to sell Canadian dollars versus buying U.S. contracts that do the opposite. Canada’s dollar has fallen 1.2 percent in the past three months versus nine developed-nation peers tracked by the Bloomberg Correlation-Weighted Index. (SPX) The currencies of Australia and New Zealand, fellow commodity exporters, slid 12 percent and 6.5 percent. The greenback rose 2.2 percent. Futures on crude oil decreased 0.8 percent to $105.66 a barrel in New York, and Standard & Poor’s GSCI index of raw materials dropped 0.6 percent. The S&P 500 Index of U.S. stocks fell 0.6 percent. To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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