By Chris Fournier Nov. 17 (Bloomberg) -- Canada’s currency touched the lowest level in more than a week as investors’ appetite for higher- yielding assets waned, pushing down global stocks and lifting the U.S. dollar. The Canadian dollar, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, fell against eight of the 16 most-actively traded currencies tracked by Bloomberg. The U.S. dollar rose against all but three, the Taiwanese dollar, Brazil’s real and the South Korean won. Federal Reserve Chairman Ben S. Bernanke said yesterday the central bank’s policy will help support a “strong” dollar. “The Fed’s comments are adding to the propensity of the market to reassess its risk appetite,” said John Curran, a Toronto-based senior vice president at CanadianForex Ltd., an online foreign-exchange dealer. “The recovery is still in its early stages.” Canada’s currency depreciated as much as 1.4 percent to C$1.0619 per U.S. dollar, the weakest level since Nov. 9, and was down 0.3 percent to C$1.0506 at 4:29 p.m. in Toronto, from C$1.0475 yesterday. One Canadian dollar buys 95.18 U.S. cents. The loonie pared losses as crude oil, the nation’s biggest export, erased a decline and rose before a report tomorrow forecast to show U.S. fuel supplies decreased last week. U.S. stocks reversed losses as oil advanced. ‘Small Gain in Oil’ “You had a small gain in oil and some decent equity markets,” said Shane Enright, a currency strategist in Toronto at Canadian Imperial Bank of Commerce, the nation’s fifth largest lender. “My guess is that on balance the U.S. dollar will remain weak.” The Canadian currency gained 16 percent this year and reached the strongest in more than 14 months on Oct. 15, C$1.0207. Touching that level again in 2009 may be unlikely, according to CanadianForex’s Curran. “It looks like we might be getting into a bit of a range of C$1.04 to C$1.09, roughly speaking,” Curran said. “I’d be surprised to see us break out of that before the New Year.” The MSCI World Index, a measure of stocks in 23 developed nations, dropped 0.4 percent. The Standard & Poor’s 500 Index, a benchmark of U.S. stocks, rose 0.1 percent after falling 0.6 percent. Crude oil for December delivery dropped as much as 1 percent to $78.14 a barrel in New York before rising 0.3 percent to $79.15. Gold for December delivery was little changed at $1,140.30 an ounce after dropping earlier as much as 1 percent. It touched a record high yesterday of $1,144.20. Commodities account for more than half of Canada’s export revenue. Bonds Rise Canadian government bonds rose. The yield on the 10-year note dropped three basis points, or 0.03 percentage point, to 3.37 percent, and the price of the 3.75 percent security due in June 2019 increased 24 cents to C$103.07. The two-year note’s yield fell four basis points to 1.31 percent. The 10-year bond yielded 2.06 percentage points more than the two-year security. The so-called yield curve touched 2.30 percentage points on May 27, the steepest since January 2002. Canada’s consumer price index likely increased 0.1 percent in October from a year earlier, after four straight monthly declines, according to the median forecast in a Bloomberg News survey of 22 economists. The central bank’s inflation target is 2 percent. Statistics Canada is due to release the data tomorrow at 7 a.m. in Ottawa. ‘Reasonable Pace’ Fed Bank of Richmond President Jeffrey Lacker said today in a speech in Richmond, Virginia, that U.S. central bank officials can’t be “paralyzed” by weak parts of the economy that may keep them from raising interest rates to contain inflation. The U.S. economy will expand at a “reasonable pace” next year, even with a weak labor market, Lacker said. “This is going to keep the market on its toes with regard to U.S. dollar positioning,” said CanadianForex’s Curran. The Fed is “warming up the market well in advance for the possibility of rate increases. I don’t see it happening any time in the near future, but possibly toward the end of next year.” To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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