By Chris Fournier Feb. 6 (Bloomberg) -- Canada’s dollar fell for a fourth straight week against the yen as concern nations such as Greece and Portugal will struggle to cut their budget deficits drove down the price of crude oil and gold. The loonie touched a three-month low against its U.S. counterpart on reduced demand for currencies tied to economic growth as Group of Seven finance ministers convened in Canada yesterday. It fluctuated versus the greenback as Europe’s sovereign debt risk countered reports showing Canada gained almost three times as many jobs as expected in January and the U.S. unemployment rate fell to the lowest since August. “Rising risk aversion is hurting oil and the Canadian dollar,” said Camilla Sutton, director of currency strategy in Toronto at Bank of Nova Scotia, the nation’s third-biggest lender. “Risk aversion due to escalating sovereign fears in the euro zone has been the main driver.” The Canadian currency, known as the loonie for the image of the aquatic bird on the C$1 coin, traded at C$1.0716 per U.S. dollar, compared with C$1.0704 on Jan. 29. It touched C$1.0781 yesterday, the weakest level since Nov. 6. The loonie dropped 1.2 percent to 83.30 yen, from 84.32. The yen rose this week against all of its 16 major counterparts tracked by Bloomberg as European debt concern reduced demand for risk. Japan’s currency tends to strengthen during times of uncertainty because a trade surplus makes the nation less reliant on foreign capital. The dollar benefits from its role as the world’s main reserve currency. Sovereign Debt Risk European Central Bank President Jean-Claude Trichet failed on Feb. 4 to allay investors’ concern that the euro region’s most indebted members, Greece, Spain and Portugal, threaten the stability of the common currency. “The risk aversion emanating from Greece is taking on a life of its own,” said David Watt, senior currency strategist in Toronto at Royal Bank of Canada, the nation’s biggest bank. The Reuters/Jefferies CRB Index of 19 commodities fell for a fourth straight week, dropping 2.7 percent. Crude oil for March delivery lost 2.3 percent. Raw materials account for half of Canada’s export revenue. The Standard & Poor’s 500 Index lost 0.7 percent, while the S&P/TSX Composite Index of Canadian equities gained 1.2 percent. Canada’s dollar gained yesterday against the greenback and yen and initially rose versus the Australian and New Zealand currencies as a report from Statistics Canada showed the nation’s unemployment rate dropped to 8.3 percent. Canada’s Job Market G-7 finance ministers gathered yesterday 195 miles south of the Arctic Circle in Iqaluit, Canada. Finance Minister Jim Flaherty, who chairs the two-day gathering, was due to confer with U.S. Treasury Secretary Timothy F. Geithner and Trichet in the capital of Canada’s northernmost territory, Nunavut. “Given the currency moves of past 48 hours, they’ll probably comment on the volatility of the currency markets and how volatility isn’t good,” said Amelia Bourdeau, a currency strategist at UBS AG in Stamford, Connecticut. Loonie Versus Aussie The loonie increased 1.7 percent to 1.0745 Australian dollars, from 1.0570 at the end of last week. It advanced 1.7 percent to 1.3530 New Zealand dollars, from 1.3311. The 2-year Canadian government bond’s yield decreased eight basis points, or 0.08 percentage point, to 1.25 percent. The price of the 1.5 percent security due in March 2012 advanced 15 cents to C$100.50. The Bank of Canada announced this week an offering of C$3.2 billion ($3 billion) of three-year bonds on Feb. 10, according to a statement on the central bank’s Web site. The 1.75 percent securities will mature in March 2013. --With assistance from Allison Bennett and Inyoung Hwang in New York. Editors: Dennis Fitzgerald, Greg Storey To contact the reporter on this story: Chris Fournier in Montreal at +1-514-940-6476 or cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at +1-212-617-8988 or dliedtka@bloomberg.net

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