By Allison Bennett and Chris Fournier (Corrects percentage change in fourth graf.) March 11 (Bloomberg) -- Canada’s dollar dropped for the first time in 10 days after a report on U.S. trade indicated the global economic recovery may be slowing, reducing demand for riskier assets. The Canadian dollar, nicknamed the loonie, fell against 14 of its 16 most-traded counterparts as the U.S trade deficit decreased 6.6 percent in January to $37.3 billion from a revised $39.9 billion in December. The loonie was among the three worst performers against the greenback, along with the currencies of commodity-exporters Australia and New Zealand. “The fact that the U.S. trade balance improved is not a good thing,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “It’s hurting the commodity currencies; people have pulled back some of their bets and are kind of hiding.” The Canadian currency weakened as much as 0.7 percent to C$1.0322 per U.S. dollar before trading at C$1.0292 at 10:28 a.m. in Toronto. It closed at C$1.0246 yesterday, when it reached C$1.0217, the strongest level since Oct. 15. One Canadian dollar buys 97.15 U.S. cents. Crude oil, Canada’s largest export, fell as much as 0.9 percent to $81.33 before trading at $81.93. The U.S. trade figures showed Americans imported in January the fewest barrels of crude oil in a decade. The loonie tends to track equities and commodities. The Standard & Poor’s 500 Index fell 0.2 percent and the S&P/TSX Composite Index, Canada’s equity benchmark, fell 0.1 percent. ‘Very Long’ Canada posted a C$799 million ($778 million) merchandise trade surplus in January, wider than expected, as exports rose and imports fell. December’s surplus was revised to C$75 million. “The headline on the trade surplus is actually quite good, the problem is the market is looking very long on the Canadian dollar and short of the U.S. dollar,” said Shaun Osborne, chief currency strategist in Toronto at Toronto-Dominion Bank. “The market is positioned all the same way and there aren’t any more Canadian dollars coming in to the market.” A report tomorrow is expected to show Canada added 15,500 jobs last month, according to the median forecast in a Bloomberg News survey, after gaining 43,000 in January. The Canadian currency also fell on concern China will seek to damp growth after inflation rose to a 16-month high, diminishing the appeal of riskier currencies. Consumer prices in China rose 2.7 percent in February, more than forecast, the National Bureau of Statistics said in Beijing today. The loonie yesterday gained for a ninth consecutive day against its U.S. counterpart, the longest streak since 2004, as investors bet the nation’s economy will be among the strongest during the global recovery. The Canadian currency has gained 2.1 percent against the U.S. dollar since the beginning of the month as the Bank of Canada said on March 2 that inflation and economic output are higher than expected, adding to speculation policy makers are moving closer to increasing the benchmark interest rate. The central bank held the overnight lending rate at a record-low 0.25 percent after saying the economy grew more than expected. Bank of Canada Governor Mark Carney is scheduled to speak today in Ottawa. His remarks will be published on the central bank’s Web site at 1:50 p.m. Ottawa time. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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