Canada’s dollar erased a gain against its U.S. counterpart after a drop in crude oil prices increased speculation demand will wane for currencies of nations that are dependent on commodities for growth.
The currency earlier rose as much as 0.5 percent versus the greenback as equities, copper and natural gas prices rose. Stocks erased gains and crude oil futures extended declines after a report showed a surge in inventories.
“The inventory data is quite a big spike,” Sacha Tihanyi, a currency strategist at Bank of Nova Scotia, Canada’s third- largest bank, said by phone from Toronto. “That’s probably why we’re getting this little peak higher” in the greenback versus the loonie.
The currency traded at C$1.0384 per U.S. dollar at 2:59 p.m. in Toronto, compared with C$1.0354 yesterday, when it reached C$1.0256, the strongest level in more than a month. One Canadian dollar buys 96.32 U.S. cents.
The currency, known as the loonie for the aquatic bird on the one-dollar coin, lagged behind all but five of its 16 most- traded counterparts. Portfolio rebalancing by asset managers capped the loonie’s losses, Tihanyi said.
In the process, Tihanyi said fund managers with fixed weightings of foreign assets sell the greenback to adjust for the value of U.S. equities.
Up For Month
Crude for September delivery fell 0.4 percent to $77.17 a barrel on the New York Mercantile Exchange. Supplies surged 7.31 million barrels to 360.8 million in the week ended July 23, the Energy Department said today in a weekly report.
The loonie is up 2.7 percent versus the greenback this month, only the 10th-best performing major, while the greenback has declined against all 16 of its most-traded counterparts. Year to date, the Canadian currency is up 1.6 percent.
Concern has receded that the European sovereign-debt crisis will widen, just as recent U.S. economic data have called into question the durability of the North American recovery.
Bookings for durable goods -- U.S. items meant to last at least three years -- fell 1 percent last month after falling 0.8 percent in May, the Commerce Department reported today. The median forecast of 76 economists in a Bloomberg News survey was for a 1 percent gain.
The spread between the Canadian government 2- and 10-year bond yields held steady today at 1.63 percentage points. The so- called yield curve ended July 9 at 1.51 percentage points, the flattest on a closing basis since December 2008. A basis point is 0.01 percentage point.
The MSCI World Index of equities in 24 developed markets fell 0.1 percent. Copper rose to an 11-week high at $7,196.25 a metric ton. Natural gas futures climbed 2.1 percent to $4.774 per million British thermal units.
Canadian home prices rose 1.3 percent in May from the previous month, the Teranet-National Bank Composite House Price Index showed. Prices rose 13.6 percent from May 2009, according to a report released today by National Bank Financial.