By Chris Fournier and Allison Bennett Jan. 21 (Bloomberg) -- Canada’s dollar touched a three-week low on speculation China will seek to curb its faster-than- expected economic expansion, dimming the appeal of currencies that traditionally benefit from global growth. The currency fell for a third day as the Bank of Canada said economic growth will peak in the second quarter, hindered by a strong currency, weak U.S. demand and the end of government stimulus. China’s statistics bureau said the nation’s gross domestic product grew 10.7 percent last quarter from the year before, faster than the 10.5 percent median forecast of economists in a Bloomberg News survey. “ It looks like China will have to do some more tightening,” said Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal, Canada’s fourth-largest lender. “That’s having a negative impact on commodity currencies.” The Canadian currency depreciated as much as 0.6 percent to touch C$1.0524 per U.S. dollar, the weakest level this year, before trading little changed at C$1.0494 at 10:41 a.m. in Toronto, down 0.3 percent, compared with C$1.0464 yesterday. One Canadian dollar buys 95.29 U.S. cents. Bank of Montreal’s Jespersen sees “some more downside” to the Canadian dollar and predicted it could weaken to C$1.0650. “We’re still looking to buy the Canadian dollar on dips, but this could be a big dip,” he said. ‘Persistent Strength’ The Bank of Canada, in its Monetary Policy Report, said growth will quicken to a 4.3 percent annualized rate next quarter before gradually slowing to a 2.2 percent rate at the end of 2011. Annual growth this year will be 2.9 percent and 3.5 percent in 2011, the report said. “The persistent strength in the Canadian dollar and the absolute low level of U.S. demand will, however, continue to dampen exports,” the report said. Canada’s central bank, in a statement on Jan. 19 after a policy meeting, reiterated that the currency’s strength hampers the nation’s economic recovery. The bank held the benchmark lending rate at a record-low 0.25 percent and said it will remain there through June, barring changes in the inflation outlook. Canadian wholesale sales climbed more than forecast in November, advancing 2.5 percent to C$42.4 billion ($40.4 billion) for a third consecutive monthly gain, a Statistics Canada report showed today. Economists expected a 0.5 percent rise, according to a Bloomberg survey. The gain was led by increased shipments in the automotive and food industries. U.S. stocks fell, with the Standard & Poor’s 500 Index dropping 1.1 percent, as an increase in initial jobless claims and speculation about China offset better-than-estimated results at EBay Inc. and Starbucks Corp. Canada’s currency fell the most on an intraday basis yesterday in almost three months. 1.7 percent, after a report showed the nation’s inflation rate rose less than economists on average predicted, reducing pressure on the central bank to raise interest rates. To contact the reporters on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net

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