May 2 (Bloomberg) -- The Canadian dollar fell against its U.S. counterpart after Stephen Poloz, head of the nation’s export-financing agency, was named to lead the Bank of Canada amid concern he may be more amenable to easier monetary policy than the official he will succeed.
The currency strengthened earlier versus most of its major counterparts as stimulus measures by the European Central Bank and Federal Reserve boosted demand for higher-yielding currencies and stocks and commodities rose. Canada’s central bank announced Poloz’s appointment, effective June 3, in a statement today from Ottawa.
“The consensus view on the street is that he’s probably a pretty dovish candidate that will probably lead to easier monetary policy than we otherwise would have expected,” Jamie Price, director of fixed income at Macquarie Private Wealth in Toronto, said in an interview.
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, declined 0.2 percent to C$1.0105 per U.S. dollar at 5 p.m. in Toronto. It gained earlier as much as 0.2 percent to C$1.0060. The loonie reached a 10-week high of C$1.0052 yesterday. One Canadian dollar buys 98.95 U.S. cents.
The Canadian currency slid 0.7 percent versus the euro to C$1.3198.
Poloz will succeed Mark Carney, who’s scheduled to depart June 1 and take over as Bank of England Governor a month later.
Canada’s central bank has resisted joining Group of Seven peers in taking extraordinary measures to stimulate expansion, even amid the slowest six months of growth since the 2009 recession.
Canadian government bond yields of 1.41 percent compared with those of G-7 peers that average 0.92 percent, according to Bank of America Merrill Lynch index data. The yield gap has averaged about 52 basis points, or 0.52 percentage points, over the past year.
The ECB cut its key rate to a record low 0.5 percent today, a day after the Fed said it will boost bond buying under quantitative easing if needed. The Bank of Canada’s benchmark rate is 1 percent.
Canada’s benchmark 10-year government bonds rose today, with yields falling one basis point, or 0.01 percentage point, to 1.67 percent, the lowest level since July. The 1.5 percent security maturing in June 2023 gained 8 cents to C$98.43.
Crude oil, the country’s largest export, rose 3.3 percent to $94.03 per barrel, and Standard & Poor’s GSCI Index of raw materials climbed 1.9 percent. The S&P TSX benchmark gained 58.35 points to 12,379.64.
Poloz, 57, is chief executive officer of Export Development Canada, a government trade financing agency. He joined EDC in 1999 as chief economist after three years with Bank Credit Analyst Research in Montreal and 14 years at the Bank of Canada in roles that included head of the research department.
Policy makers in the world’s 11th largest economy are grappling with a strong currency and sluggish global demand that are hampering exports, record consumer-debt loads that are curbing spending and inflation below the central bank’s 2 percent target.
The Canadian dollar has risen 0.4 percent this year against nine other developed-nation currencies tracked by the Bloomberg Correlation Weighted Index. The greenback has gained 2.5 percent and the euro has added 1.3 percent, while the yen has tumbled 10.5 percent.
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