By Chris Fournier Nov. 14 (Bloomberg) -- Canada's currency depreciated against its U.S. counterpart on speculation that a slowdown in global economic growth may deepen, damping demand for commodities such as crude oil. The Canadian dollar declined 2.9 percent this week. The Bank of Canada's index of 23 commodity prices has slumped more than 40 percent since reaching a record in July. ``Every indicator is pushing in the direction of further Canadian dollar weakness,'' said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. ``Global growth is fading. Commodities are fading.'' The Canadian dollar dropped as much as 1.6 percent to C$1.2318 per U.S. dollar, from C$1.2119 yesterday. It traded at C$1.2237 at 2:11 p.m. in Toronto. One Canadian dollar buys 81.71 U.S. cents. The currency has lost 18 percent this year. Galy forecasts the loonie, as Canada's dollar is known for the aquatic bird on the one-dollar coin, will weaken to C$1.30 ``very easily'' by year-end. Crude oil has lost 61 percent since reaching a record $147.27 a barrel on July 11. Natural gas futures are down 6.7 percent this week. The raw materials generated 17 percent of Canada's 2007 export revenue. ``The downward pressures on the loonie are still alive and kicking,'' Yanick Desnoyers, a senior economist with National Bank Financial in Montreal, wrote in a report. He predicts the Canadian dollar will depreciate to C$1.28 by the end of the first quarter next year. ``The most likely scenario remains further deterioration in the world economy.'' Europe's Recession Europe's economy fell into its first recession in 15 years as gross domestic product in the 15 euro nations shrank for two straight quarters. The Organization for Economic Cooperation and Development cut its 2009 global-growth forecast for the second time this year. Overall new orders for factory goods fell 3.6 percent in September, the second straight decline, Statistics Canada said today in Ottawa. Sales at U.S. retailers declined 2.8 percent in October, the most on record, the Commerce Department reported. ``We continue to advocate buying U.S. dollars on dips, targeting a return to C$1.25 to C$1.30 at a minimum,'' according to CIBC World Markets analysts Shane Enright in Toronto and Adam Fazio in New York. ``The immediate technical call is for further U.S. dollar strength.'' A two-day summit on the global economic crisis begins today in Washington with world leaders likely to agree on little more than trying to spend their way out of a global recession. The Group of 20 heads of state are divided on what needs to be done after that. European leaders are demanding greater state controls over financial markets. President George W. Bush, who hosts a dinner of his counterparts at the White House tonight, takes a narrower view. `A Disappointment' ``The markets could be in for a disappointment on Monday,'' Shaun Osborne and Jacqui Douglas, currency strategists at TD Securities Inc. in Toronto, wrote in a report. ``It's not likely that the world's major countries are going to agree on any action as concrete as coordinated fiscal policy or a re-jigging of the global currency markets.'' The yield on the two-year government bond rose 1 basis point, or 0.01 percentage point, to 1.92 percent. The price of the 2.75 percent security due in December 2010 fell 3 cents to C$101.65. The 10-year note's yield dropped 8 basis points to 3.66 percent. The price of the 4.25 percent security maturing in June 2018 rose 62 cents to C$104.74. The 10-year bond yielded 174 basis points more than the two- year security, down from 182 basis points yesterday, and 184 basis points on Nov. 6, when the so-called yield curve was the steepest since May 2004. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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