Canada’s dollar fell a third day as the government of its largest trading partner remained shut amid a political impasse about budgeting and lifting government borrowing authority.
The currency reached a four-week low as crude oil, the nation’s largest export, declined and gold dropped for a second day. A report yesterday showed Canada’s trade deficit widened in August even as exports to the U.S. that reached the highest since the end of 2011. Jobs growth slowed last month, according to a Bloomberg survey of economists before the government report on Oct. 11.
“We’ve seen some signals the U.S. slowdown may spill over to Canada, and we’ve had some weak trade numbers,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto, said by phone. “The Canadian dollar has really been sidelined and moving sideways for the past couple of weeks and I don’t think that’s going to change in the near term.”
The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, declined 0.3 percent to C$1.0394 per U.S. dollar at 5 p.m. in Toronto, after reaching the weakest level since Sept. 9. One Canadian dollar buys 96.21 U.S. cents.
The currency traded weaker than its 50-, 100- and 200-day moving averages for a second day, after trading stronger than all three as recently as Sept. 19. Crude oil futures dropped 2 percent to $101.39 a barrel in New York while gold futures lost 1 percent to $1,305.59 per ounce.
Canada’s benchmark 10-year government bonds fell, with yields rising one basis point, or 0.01 percentage point, to 2.58 percent. The 1.5 percent securities maturing in June 2023 fell 10 cents to C$90.88.
The government sold C$2.7 billion ($2.6 billion) of three-year bonds at a yield of 1.539 percent, according to the Bank of Canada. The securities mature in February 2017.
The August trade deficit increased to C$1.31 billion and July’s shortfall was raised to C$1.19 billion from an initial C$931 million, Statistics Canada said yesterday in Ottawa.
President Barack Obama and Republican lawmakers continue to tussle about reopening the government and raising the debt ceiling, which had sent Treasury bill rates to the highest since October 2008.
The Bank of Canada said it welcomed Obama’s nomination of Janet Yellen’s to lead the Federal Reserve.
“The bank looks forward to continuing the close working relationship it has enjoyed with Ms. Yellen and her colleagues,” the Ottawa-based central bank said in a statement on its website. “The bank has been honoured to work with Fed Chairman Ben Bernanke for the past eight years, and we wish him every success in his future endeavours.”.
Most Fed policy makers said the central bank was likely to reduce the pace of its bond purchases this year, even as they unexpectedly refrained from such a move in September, minutes of their last meeting show.
The Canadian dollar has lost 2.3 percent this year against nine developed-market peers tracked by the Bloomberg Correlation-Weighted Index. The U.S. dollar is up 2.8 percent, while the Australian currency fell 7.5 percent.