BLBG: Canadian Currency Weakens for a Third Day as Stocks, Oil Tumble
By Chris Fournier
Nov. 19 (Bloomberg) -- Canada’s dollar fell for a third day as a stronger U.S. counterpart pushed higher-yielding assets such as stocks and crude oil lower, dimming the appeal of currencies tied to growth.
The Canadian currency is headed for its first weekly drop this month, falling 1.5 percent since Nov. 13. The U.S. dollar advanced today against all of its 16 most-traded counterparts tracked by Bloomberg except the yen.
“Risk is off,” said Firas Askari, head currency trader in Toronto at Bank of Montreal, Canada’s fourth-largest lender. “The U.S. dollar is bouncing across the board.”
The Canadian currency depreciated 1.3 percent to C$1.0683 per U.S. dollar at 10:54 a.m. in Toronto, from C$1.0547 yesterday. It touched C$1.0689, the weakest level since Nov. 9. One Canadian dollar buys 93.61 U.S. cents.
Bank of Canada Governor Mark Carney is due to speak in New York at 6:05 p.m., and his remarks will be posted to the bank’s Web site at 5:50 p.m. Traders are watching for hints on when policy makers might begin to raise interest rates from record lows amid signs the global recovery is firming.
“Foreign-exchange price action is expected to remain choppy at least over the short-term,” George Davis, chief technical analyst for fixed-income and currency strategy in Toronto at Royal Bank of Canada, the nation’s biggest, wrote in a note to clients today. That will make “trading conditions a challenge from a technical standpoint as the markets lack clear direction.”
Quadruple the Estimates
Foreigners bought a net C$13.6 billion ($12.8 billion) of Canadian securities in September, Statistics Canada said in Ottawa, more than four times the C$3 billion median forecast of economists in a Bloomberg survey. Stocks led the gain.
Canadian wholesale sales rose 0.2 percent to C$41 billion in September, the statistics agency said. That trailed the 1 percent forecast of economists in another Bloomberg survey. In a separate report, Statistics Canada said the index of leading economic indicators rose for a fourth month in October, increasing 0.7 percent.
The Standard & Poor’s 500 Index dropped 1.9 percent. Crude oil for December delivery tumbled as much as 3.1 percent to $77.13 a barrel on the New York Mercantile Exchange. Crude is Canada’s biggest export.
The Canadian dollar, 14 percent higher this year against the greenback, tends to trade in tandem with stocks and commodity prices. A close above C$1.0698 would produce a “bullish trend reversal” in the currency pair, meaning the U.S. dollar would likely rise to C$1.0867 over the medium term against the loonie, RBC’s Davis wrote.
Government bonds rose, with the yield on Canada’s benchmark five-year note falling two basis points, or 0.02 percentage point, to 3.60 percent. The price of the 2 percent security maturing in December 2014 advanced 11 cents to C$97.21.
The yield on the two-year note fell three basis points to 1.28 percent. Canada’s government bonds lost investors 0.9 percent this year, according to a Merrill Lynch index.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
