Canadian Dollar Falls Versus U.S. Peer as Data Damp Risk Demand

Canada’s dollar fell to its lowest level in almost a month against its U.S. counterpart as a slump in Chinese non-manufacturing industrial growth offset a private report showing U.S. employers hired more workers than forecast.

The currency weakened for a second day before data Oct. 5 that economists project will show Canadian employers added fewer workers last month. Crude oil, the nation’s largest export, fell below $90 a barrel and euro-area services and manufacturing output contracted in September, damping demand for riskier assets.

“The story for the Canadian dollar has been one of weakness that has stretched to all commodity currencies as China has slowed and oil and other commodities drop,” said Greg Moore, currency strategist at Toronto-Dominion Bank, said in a phone interview. “The theme into the end of the year should continue to be one of slower global growth and that should keep pressure on risk currencies.”

Canada’s currency, nicknamed the loonie for the image of the waterfowl on the C$1 coin, depreciated 0.4 percent to 98.76 cents per U.S. dollar at 10:45 a.m. in Toronto. It touched 98.84, the weakest since Sept. 6. One Canadian dollar buys $1.0127.

Crude-oil futures dropped 2.9 percent to $89.25 a barrel in New York. The Standard & Poor’s 500 Index rose 0.1 percent.

Bonds Drop

Government bonds were little changed with the yield on the 10-year government security at 1.72 percent. The 2.75 security maturing in June 2022 added lost 1 cent to C$109.10.

The Bank of Canada will announce details tomorrow for a three-year note auction on Oct. 10.

Canadian issuers of junk loans are bypassing bank lenders by tapping U.S. hedge funds and institutional investors to cut costs for acquisitions, creating a market for the debt that may eventually translate across the border.

Garda World Security Co., Canada’s largest security company, is hosting a lender meeting today in New York to market $350 million of loans mostly for non-bank investors. Valeant Pharmaceuticals International Inc., Canada’s largest publicly traded drug-maker, sold $1 billion to non-bank investors on Sept. 28 as part of $2.75 billion of debt to back its buyout of Medicis Pharmaceutical Corp.

Economic Data

China’s nonmanufacturing industries expanded at the weakest pace since at least March 2011 as the purchasing managers’ index fell to 53.7 in September from 56.3 in August. Readings above 50 indicate expansion.

The 162,000 increase in U.S. employment for September followed a revised 189,000 jump in August, figures from Roseland, New Jersey-based ADP Employer Services showed today. The median forecast of 38 economists surveyed by Bloomberg projected a 140,000 advance.

Canadian employers added 10,000 jobs last month, compared with 34,300 the previous month, according to a Bloomberg News survey of 24 economists. The jobless rate is projected to hold at 7.3 percent.

Canada’s dollar has declined 1.2 percent during the past month against nine developed-nation counterparts tracked by Bloomberg Correlation-Weighted Currency Indexes. The greenback has dropped 1.1 percent.

“Risk-related currencies are trending lower, and that has to have an influence on a currency like the Canadian dollar, which is highly correlated to risk,” Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto, said in a telephone interview.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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