Canada’s dollar dropped for a fourth straight day in the longest losing streak since December as crude oil tumbled below $100 a barrel.
The loonie, as the currency is nicknamed, slid against the yen and pound as a decrease in U.S. demand for gasoline added to signs of slowing growth for Canada’s biggest trading partner. Commodities dropped the most in almost two years on speculation global economic growth will slow. Raw materials including crude oil account for about half of Canada’s export revenue.
“Almost all of the move is coming from the commodity market,” said Camilla Sutton, chief currency strategist at the capital markets unit of Bank of Nova Scotia in Toronto. “Commodity markets are small markets, and when you have a lot of investors moving toward one small market, it tends to push prices up beyond their natural, or valuation, level.”
The loonie depreciated 0.8 percent to 96.69 cents versus the greenback at 5 p.m. in Toronto, from 95.94 cents yesterday, after declining as much as 1.2 percent to 97.13 cents, the weakest level since April 18. One Canadian dollar buys $1.0342. The Canadian currency touched 94.46 cents on April 29, the strongest since November 2007.
Futures on crude oil, Canada’s biggest export, fell as much as 11 percent to $98.25 a barrel before trading at $99.83. U.S. stockpiles climbed to the highest level since October, and gasoline consumption slipped to a four-week low, the U.S. Energy Department said yesterday.
Raw Materials Tumble
The Standard & Poor’s GSCI Index of 24 raw materials declined 6.3 percent today. Silver, crude oil and heating oil led the declines.
“The last two weeks, especially in silver and others, there’s been pure speculative froth in the market, which you always find at the end of a strong move,” said Joseph Trevisani, chief market analyst at FX Solutions Inc. in Saddle River, New Jersey.
Soros Fund Management LLC, the $28 billion hedge fund run by Keith Anderson, has sold much of its gold and silver holdings, the Wall Street Journal reported yesterday, citing unidentified people. Many of the sales took place over the past month, according to the report.
The euro slid today against most of its major counterparts including the Canadian dollar after European Central Bank President Jean-Claude Trichet said inflation risks will be watched “very closely,” signaling the ECB may wait until after June to raise interest rates again. European policy makers left the main refinancing rate unchanged at 1.25 percent today.
Loonie Versus Euro
The Canadian dollar gained 1.2 percent to C$1.4059 versus the euro, declined 1.4 percent to 82.81 yen and slid 0.2 percent to C$1.5846 against the pound.
Government bonds advanced, with the yield on the 10-year security down two basis points, or 0.02 percentage point, to 3.18 percent. The price of the 3.25 percent security maturing in June 2021 advanced 18 cents to C$100.58.
The loonie remained lower versus the greenback after a report showed purchasing by Canadian governments and companies advanced in April at a slower rate. The Ivey purchasing managers’ index dropped on a seasonally adjusted basis to 57.8, the lowest level since January, according to the University of Western Ontario business school’s website. Readings of more than 50 indicate purchasing rose.
Employers in Canada added 20,000 positions in April after a decrease of 1,500 in the previous month, according to the median forecast of 25 economists in a Bloomberg News survey before a report tomorrow from Statistics Canada. The unemployment rate may have stayed at 7.7 percent. America gained 185,000 jobs, according to the median forecast before the U.S. Labor Department’s payrolls report.