The Canadian dollar weakened for a fourth day, the longest losing streak versus its U.S. counterpart since May, on concern demand for natural resources will decline as investors question global-growth prospects.
The currency dropped to the lowest level since August as crude oil, the nation’s largest export, headed for a second weekly loss. Bank of Canada Governor Mark Carney said on Oct. 24 that the need for higher interest rates has become “less imminent,” a day after strengthening the case for tightening monetary policy.
“The market got whipped around this week on Carney’s comments and it’s finding it hard to find a positive direction,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, said in a phone interview from Toronto.
The loonie, as the currency is known for the aquatic bird on the C$1 coin, fell 0.2 percent to 99.69 cents per U.S. dollar at 5:00 p.m. in Toronto. One Canadian dollar buys $1.0031. The currency touched 99.42, the least since Aug. 7, and is down for a third week, also the longest stretch of losses since June.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. The median forecast of 86 economists surveyed by Bloomberg called for a 1.8 percent gain.
“We saw a little bit of Canadian dollar strength after U.S. GDP data,” John Curran, a senior vice president at CanadianForex Ltd., an online foreign-exchange dealer, said in a phone interview from Toronto. “When people look at Europe in the harsh reality of daylight, they realize that global prospects are not that great and the Canadian dollar will suffer.”
Spanish unemployment climbed to a fresh record in the third quarter as a deepening recession left one in four workers jobless, adding pressure on Prime Minister Mariano Rajoy to seek a second European bailout. Spain is still playing for time nearly three months after the European Central Bank offered bond buys to lower its borrowing costs.
Canadian government bonds rose, pushing the benchmark 10-year note yield down 0.06 percentage point, or six basis points, to 1.83 percent. The price of the 2.75 percent notes maturing in June 2022 rose 51 cents to C$108.02.
The Bank of Canada policy makers this week kept the benchmark rate at 1 percent, where it’s been more than two years. Carney had suggested in an Oct. 15 speech that the economic forecast this week would reflect a slow global recovery.
“The bank isn’t going to be moving rates anytime soon,” Curran said. “I don’t know why people are getting so excited about that. It should be clear to most people, but global macro concerns should be forefront on peoples’ minds.”