By Chris Fournier Oct. 30 (Bloomberg) -- Canada’s dollar tumbled versus its U.S. counterpart, registering a second straight weekly loss, as a government report showed the nation’s economy unexpectedly contracted in August and stocks and oil dropped. “GDP in Canada is doing the pushing today,” said Eric Lascelles, chief economist and strategist at TD Securities Inc. in Toronto, a unit of the nation’s biggest bank. “The data suggests that we’re not completely out of the woods yet. It is Canadian-dollar negative.” The Canadian currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, erased the gain it posted yesterday, when it climbed from near a four-week low. It dropped for October, its third monthly loss in the past five months. Canada’s dollar depreciated 1.7 percent to C$1.0848 per U.S. dollar, the weakest level since Oct. 2, at 5 p.m. in Toronto, from C$1.0665 yesterday, when it gained as much as 1.4 percent. One Canadian dollar buys 92.19 U.S. cents. For the week, the loonie dropped 2.9 percent, from C$1.0538 on Oct. 23. The nation’s gross domestic product shrank 0.1 percent in August, from unchanged in the previous month and a 0.1 percent expansion in June, Statistics Canada said in Ottawa. The median forecast in a Bloomberg News survey of 23 economists was for a 0.1 percent increase. The report is another sign Canada’s economic recovery is “fragile,” and the government needs to continue with an economic stimulus package, Finance Minister Jim Flaherty told reporters today in Toronto. Volatility an ‘Enemy’ Flaherty said he prefers stability in the Canada-U.S. exchange rate, and called volatility the “enemy” of local businesses and exporters. The U.S. is Canada’s biggest trade partner. Bank of Canada officials intensified warnings at their Oct. 20 policy meeting that the strength of the currency, which gained 27 percent from a four-year low on March 9 through Oct. 19, threatens an economic recovery. The loonie dropped 5.3 percent since then. Bank Governor Mark Carney reiterated the comments in parliamentary testimony this week in Ottawa. U.S. stocks tumbled, with the Standard & Poor’s 500 Index falling 2.8 percent for the day and posting its first monthly loss since February, after reports showed drops in American consumer spending and confidence. Personal spending fell in September for the first time in five months, sliding 0.5 percent, the Commerce Department reported. The Reuters/University of Michigan final index of consumer sentiment decreased this month to 70.6 from 73.5 in September, which was the highest in more than a year. Crude Plunges Crude oil for December delivery plunged as much as 3.8 percent to $76.85 a barrel, the lowest price in two weeks, on the New York Mercantile Exchange. Raw materials account for more than half of Canada’s export revenue, and crude is the nation’s biggest export. Government bonds rose, pushing the Canadian two-year note’s yield down nine basis points, or 0.09 percentage point, to 1.38 percent. The price of the 1.25 percent security maturing in December 2011 increased 17 cents to C$99.73. Canada’s government debt lost investors 1 percent this year, according to a Merrill Lynch index. The Canadian dollar was outperformed today by all of the 16 most-traded currencies tracked by Bloomberg against the U.S. currency except the New Zealand and Australian dollars. The greenback rose against 13 of them. The loonie fell 1.4 percent for the month against its U.S. counterpart. It appreciated to C$1.0207 on Oct. 15, the strongest since July 29, 2008. The currency last traded equal to the greenback on July 22, 2008. The Canadian dollar will trade at C$1.05 to the greenback by year-end, according to a Bloomberg survey of 37 economists and analysts. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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