Canadian Dollar Falls on Slower Global Growth Concern
(Corrects ninth paragraph to name Statistics Canada.)
Canada’s dollar depreciated after reports on manufacturing in Europe and China fueled concern that global growth was slowing, spurring demand for the safest of assets, including the U.S. dollar and the yen.
The Canadian currency fell to parity with the greenback for the first time in two weeks. It declined for a third day as a report showed January retail sales grew at less than a third of the rate economists predicted. U.S. equities, crude oil and copper fell as the appetite for higher-yielding assets waned.
“It’s all about the data -- they set the tone right from the get-go,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada (NA) in Toronto. “It is a day of risk abatement as data everywhere conspired against the Canadian dollar.”
Canada’s currency, nicknamed the loonie for the image of the waterfowl on the C$1 coin, weakened 0.7 percent to 99.93 cents per U.S. dollar at 5 p.m. in Toronto. It earlier fell 0.9 percent to trade on a one-for-one basis with the greenback for the first time since March 7. One Canadian dollar buys $1.0007.
Government bonds rose for a third day, the longest streak this month. The benchmark 10-year yield dropped four basis points, or 0.04 percentage point, to 2.20 percent, after rising to 2.297 percent on March 19, the highest since October.
The loonie dropped for a third day to 82.60 yen after an index of euro-area manufacturing and services contracted more than economists forecast in March and a private report showed manufacturing may shrink in China for a fifth month. It is the yen’s longest streak of gains against the Canadian currency since Jan. 31.
Retail sales in Canada expanded 0.5 percent in January, as the biggest jump in new car sales in three years was blunted by declines at home-improvement and electronics stores, Statistics Canada said today in Ottawa. That was less than the 1.8 percent median projection of 24 forecasts compiled by Bloomberg News.
“It’s just been a wall of disappointing data,” Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets unit in Toronto, said in a telephone interview. “The catalyst pushing us toward parity was the soft Canadian retail-sales number.”
The Statistics Canada is expected to announce tomorrow that the consumer price index rose 2.7 percent in February from a year earlier, according to a Bloomberg News survey of 25 economists. The loonie finished little changed on Feb. 17 when the agency announced the measure of inflation increased 2.5 percent in January.
“The consumer price index number is likely to be influential,” Spitz said. “From a closing perspective, anything above 99.90 would be seen as a game changer in momentum.”
The loonie declined 0.4 percent in the past week against nine developed-nation peers tracked by Bloomberg Correlation- Weighted Currency Indexes. The yen was the biggest gainer, adding 1.7 percent, while the U.S. dollar rose 0.5 percent.
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