Canada’s Dollar Weakens for First Time in Four Days

The Canadian dollar fell against its U.S. counterpart for the first time in four days as the nation’s manufacturing sales dropped the most in December since 2009.

The currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, headed for a second weekly loss amid a decline in commodities including crude oil, Canada’s biggest export. The loonie weakened versus 13 of its 16 most-traded peers as Group-of-20 finance ministers and central bankers began talks in Moscow amid bets they may criticize policies that have helped Japan’s currency depreciate.

“The Canadian dollar has weakened off to what were fairly miserable December manufacturing sales,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “If your timeframe is short, I think a lot of the risks have tilted to the downside for Canada dollar.”

The loonie depreciated 0.6 percent to C$1.0064 per U.S. dollar at 5 p.m. in Toronto. It lost 0.4 percent on the week. One Canadian dollar buys 99.36 U.S. cents.

Canada’s dollar has fallen 0.9 percent this year among the 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Indexes. The U.S. dollar has risen 0.7 percent, and the yen has tumbled 7.4 percent.

Government bonds fell, pushing yields on the benchmark 10-year debt up two basis points, or 0.02 percentage point, to 2.01 percent. The price of the 2.75 percent securities maturing in June 2022 decreased 15 cents to C$106.20.

Debt Auction

The Bank of Canada will auction C$400 million ($400 million) of real-return bonds on Feb. 20. The inflation-linked debt matures in December 2044. At its last RRB auction on Dec. 5, the central bank sold C$700 million of 30-year bonds at a median yield of 0.3 percent. The bid-to-cover ratio was 2.59 times, compared with 3.04 times at the Sept. 12 auction.

Hedge funds and other large speculators decreased bets for a fourth straight week that the Canadian dollar will gain against the greenback, reducing them to the lowest since August, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers on an advance in the loonie compared with those on a drop -- so-called net longs -- was 26,565 on Feb. 12, compared with 27,761 the week before.

Factory sales fell 3.1 percent, dropping to C$48.0 billion ($47.9 billion) from C$49.6 billion the previous month, Statistics Canada said today in Ottawa. The decline was larger than the most pessimistic forecast in a Bloomberg News survey of 17 economists that had a median estimate of a 0.8 percent decline.

The loonie remained weaker even as the Canadian Real Estate Association said existing homes sales rose 1.3 percent in January after a 0.5 percent decline in December.

Outlook Reduced

Bank of Governor Mark Carney reiterated this week that an increase in the benchmark interest rate, which has been 1 percent since 2010 to spur growth, is “less imminent” because inflation has been slower than forecast and will remain below the 2 percent target rate through the first half of next year. The bank cut its 2013 growth forecast last month to 2 percent, from a 2.3 percent estimate in October.

“The data was quite a bit softer than expected, and it painted a sluggish picture of the Canadian economy for the latter part of last year,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities Inc., said in a telephone interview from Toronto. “It reaffirms the low-for-longer outlook for interest rates.”

Futures on crude oil fell as much as 2.2 percent to 95.21 a barrel in New York, the lowest level since Feb. 11.

Commodities Drop

Standard & Poor’s GSCI Index of 24 commodities fell for the first time in four days, dropping 0.5 percent. Raw materials including oil account for about half of Canada’s export revenue.

The loonie weakened as industrial production in the U.S., Canada’s biggest trade partner, unexpectedly declined last month. Output at U.S. factories, mines and utilities fell 0.1 percent after a revised 0.4 percent gain in December, Federal Reserve data showed. The median estimate in a Bloomberg survey was for a 0.2 percent increase.

Consumer confidence in the world’s largest economy rose in February to a three-month high. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to a reading of 76.3, from 73.8 last month.

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