June 18 (Bloomberg) -- Canada’s dollar dropped against its U.S. counterpart on concern data this week will show growth in the world’s 10th-largest economy is slowing.
The currency declined as crude oil, the nation’s largest export, dropped. It rose for a third day versus the euro on speculation the Federal Reserve will embark on a new round of monetary stimulus to support financial markets when it begins a two-day meeting tomorrow.
“There’s more and more pressure on the Fed to do something proactive,” Dean Popplewell, chief strategist at the online currency-trading firm Oanda Corp., said in a telephone interview. “If we don’t have that, then the market will start unwinding whatever risk is actually left out there.”
Canada’s currency, nicknamed the loonie for the image of waterfowl on the C$1 coin, declined 0.3 percent to C$1.0243 per U.S. dollar at the close of trading at 5 p.m. in Toronto. One Canadian dollar buys 97.63 cents.
Ten-year government bonds were little changed at 1.71 percent. The bonds rose last week, pushing yields down nine basis points, or 0.09 percentage point. The yield touched 1.615 percent on June 1, the lowest since 1950, according to Bloomberg and Bank of Canada data.
Foreign investors purchased C$8.99 billion of bonds in April, compared with net divestments of C$1.20 billion the previous month, Statistics Canada said today in Ottawa. Non-residents purchased C$2.11 billion of money-market paper, the first such accumulation in four months.
The loonie rallied to C$1.0193 when trading commenced today and was unable for a third time to sustain the move below C$1.0200, creating a so-called triple bottom, which should attract “short-term buying interest” for the greenback against the loonie. This sets up a potential test of the “channel top” at C$1.0268, according to George Davis, chief technical analyst RBC Capital Markets in Toronto.
“An hourly close above this level would generate a bullish trend reversal” for the U.S. dollar versus the Canadian, Davis wrote in a note to clients today, “shifting the focus up to the C$1.0325-to-C$1.0353 region next.”
The Canadian dollar fell as Spanish 10-year bond yields rose above 7 percent, adding to concern the region’s economic turmoil is spreading to the euro bloc’s largest economies. Leaders from the Group of 20 richest nations gathered in Mexico to discuss measures to bolster the global economy.
“There’s very little faith,” said Popplewell. “It looks like policy breakdown rather than a resolution at the moment, which is not shaping up to be anywhere positive for risk taking.”
Concern Greece would be forced to leave the euro ebbed after Antonis Samaras’s New Democracy party and the Pasok party won enough seats in yesterday’s vote to control Greece’s 300-member parliament should they join forces in a coalition government.
“All eyes will be on Spain,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London, in a telephone interview. “There’s a lot of Canadian dollar data to watch out for this week, which is another wild card. If that follows the trend that we’ve been seeing in some of the U.S. data, then that might keep the Canadian dollar a little on the defensive.”
Economists predict Statistics Canada will release data this week showing slowing growth in wholesale and retail sales. Wholesale sales rose 0.2 percent in April, after a 0.4 percent advance in the previous month, according to the median of 20 forecasts compiled by Bloomberg. Ottawa-based Statistics Canada releases the report tomorrow, following that two days later with retail sales data that forecasters see rising 0.2 percent in April, after a March increase of 0.4 percent.
Futures on crude oil dropped 1.2 percent $83.06 a barrel in New York after dropping to $81.07 on June 12, the lowest since October. Canada is the largest supplier of crude to the U.S., the world’s biggest consumer.
The Canadian dollar dropped 0.6 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes. The greenback gained 3.6 percent, the most after the yen’s 9.7 percent. The euro declined 2.2 percent.
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