Canada’s dollar slid to the lowest level in more than two weeks as equities and commodities fell on concern the global recovery is slowing, sapping demand for assets related to economic growth.
The loonie was the second-biggest loser today against the greenback after the krone of rival crude oil exporter Norway. The Canadian dollar extended its drop after a government report showed manufacturing sales decreased in September.
“The overall environment is still weak for risk assets,” Sacha Tihanyi, a currency strategist in Toronto at Bank of Nova Scotia’s Scotia Capital unit, wrote via e-mail. “Canadian dollar strength or outperformance would be hard to justify in such an environment.”
The Canadian currency depreciated 1.2 percent to C$1.0223 per U.S. dollar at 5:09 p.m. in Toronto, from C$1.0099 yesterday. It touched C$1.0254, the weakest level since Oct. 28. One Canadian dollar buys 97.82 U.S. cents. The currency touched levels stronger than parity Nov. 5-11.
The MSCI World Index of equities in developed nations dropped for a seventh day, falling 1.9 percent in the longest losing streak since January. Stocks slid on concern China will take steps to curb inflation and as European finance officials met to discuss Ireland’s debt turmoil. Futures on crude oil, Canada’s biggest export, decreased as much as 3.3 percent to $82.03 a barrel, the lowest level since Nov. 1.
‘Rejection of Par’
“The Canadian dollar ranks as one of the weaker-performing currencies,” Shaun Osborne and Jacqui Douglas, currency strategists at Toronto-Dominion Bank’s TD Securities unit in Toronto, said in a research note to clients. The Canadian dollar should decline versus the greenback “towards the low to mid C$1.03 area at least as a consequence of spot’s latest rejection of par,” they wrote.
Government securities rose, pushing the yield on the 10-year bond down seven basis points, or 0.07 percentage point, to 3.07 percent. The price of the 3.5 percent security maturing in June 2020 climbed 60 cents to C$103.50. The yield increased yesterday to 3.16 percent, the highest level since Aug. 5.
Canada’s factory sales fell 0.6 percent in September after a 2 percent advance in the prior month, Statistics Canada reported today in Ottawa. The median forecast of 20 economists in a Bloomberg News survey was for a 0.9 percent decrease.