Feb. 13 (Bloomberg) --The Canadian dollar traded in its tightest range in more than three weeks on concern the economy is faltering as leaders from developed nations warned against using exchange rates to gain unfair trade advantages.
Canada’s currency fluctuated versus its U.S. peer a day after Group of Seven policy makers roiled the markets they sought to calm amid conflicting messages on how much of an economic threat the weakening yen poses. Group of 20 finance ministers and central bankers meet this week. Bank of Canada Governor Mark Carney reiterated to lawmakers yesterday interest-rate increases are less urgent in the face of a slow economy.
The currency is “doing what it does best -- it gets in a range and stays there for a while,” David Bradley, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit, said by phone. “We’re going to trade in a range through the balance of the week. Maybe the G-20 could possibly cause us to trade outside the range, but I doubt it.”
The Canadian dollar, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, was little changed at C$1.0018 per U.S. dollar at 5 p.m. in Toronto after earlier losing 0.2 percent and gaining 0.1 percent. One Canadian dollar buys 99.82 U.S. cents. The loonie traded today between C$1.0013 and C$1.0044, the tightest range since Jan. 21.
Crude oil, Canada’s biggest export, declined and stocks fluctuated. Crude for March delivery lost 0.3 percent to $97.19 a barrel in New York after rising 0.6 percent earlier. The Standard & Poor’s 500 Index rose 0.1 percent after gaining as much as 0.4 percent.
Canadian government bonds fell, pushing the yield on the benchmark 10-year security up four basis points, or 0.04 percentage point, to 2.04 percent. The price of the 2.75 percent note due in June 2022 dropped 38 cents to C$106.00.
The Bank of Canada sold C$3.3 billion ($3.3 billion) of two-year government notes at an average yield of 1.168 percent. The 1 percent securities are due in May 2015. The offering drew C$8.5 billion in bids.
The loonie fell against the majority of its most traded peers today after Bank of England Governor Mervyn King said currencies should be allowed to fluctuate on monetary-stimulus measures. Officials of major developed nations will pressure other G-20 countries to refrain from targeting exchange rates, the BOC’s Carney a Canadian parliamentary committee yesterday. Carney will head the U.K. central bank after King retires at the end of June.
Officials of the G-20, whose members include developed and emerging nations, will meet Feb. 15-16 in Moscow.
Canada’s dollar has lost 0.9 percent this year among the 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes. The U.S. dollar has gained 0.1 percent, while the yen has lost 7.6 percent.
Carney reiterated yesterday to the House of Commons finance committee that the need to raise interest rates is “less imminent than previously anticipated” because Canada’s economy will take longer to reach full output. The central bank pared its forecast on Jan. 23 for economic growth this year to 2 percent, from an October prediction of 2.3 percent.
“People could be paying more attention to Carney’s comment when he talked about considerable slack in the Canadian economy,” said David Watt, chief economist at HSBC Holdings Plc’s Canadian unit, by phone from Toronto. “We also haven’t had any Canadian data to focus on. We had that big burst of data on Friday, and if you had a modestly positive view on the Canadian dollar before that day you’re probably somewhat more cautious now.”
Employment in Canada fell in January for the first time in six months, dropping by 21,900 jobs following December’s revised gain of 31,200, Statistics Canada said Feb. 8. Housing starts plunged 19 percent last month to an annual pace of 160,577, Canada Mortgage & Housing Corp. said that day.
Retail sales in the U.S., Canada’s biggest trade partner, increased for a third month in January, gaining 0.1 percent after a 0.5 percent increase in December, Commerce Department figures showed today in Washington. January’s rise matched the median forecast of economists surveyed by Bloomberg.
To contact the reporter on this story: Ari Altstedter in Toronto at email@example.com
To contact the editor responsible for this story: Dave Liedtka at firstname.lastname@example.org