Canadian Dollar Weakens Versus Most Major Counterparts

The Canadian dollar weakened against a majority of its most-traded counterparts as jobs data next week may show a higher unemployment rate for the world’s 11th-biggest economy.

The currency reversed gains posted yesterday after a government report showed the economy grew faster than forecast in November. It briefly erased losses earlier today after a government report showed job gains for the past two months in America, the nation’s largest trading partner. Canada’s dollar fell last month for the first time since October.

“We’re basically retracing 50 percent of the Canadian dollar move from yesterday,” said Greg Moore, a currency strategist at Toronto-Dominion Bank in Toronto, in a phone interview. “It’s pretty well within the action that’s happened this week.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, was little changed at 99.65 cents per U.S. dollar at 5:00 p.m. in Toronto, after falling as much as 0.3 percent. One Canadian dollar buys $1.0035.

Futures on crude oil, the nation’s largest export, rose 0.1 percent to $97.59 a barrel in New York, after falling as much as 1 percent. Western Canada Select, the benchmark for oil-sands bitumen, traded at a discount of $31.50 to U.S. West Texas Intermediate price yesterday, down from $32 Jan. 30. The discount reached a $42.50 on Dec. 14.

Oil Swings

“The price of oil was going gangbusters earlier and then it dropped off,” said David Watt, chief economist at HSBC Holdings Plc in Toronto. “The Canadian dollar seems to be reacting to oil prices.”

The country’s benchmark 10-year bonds fell, pushing the yield up five basis points, or 0.05 percentage point, to 2.04 percent, the highest level since May. The 2.75 percent security maturing in June 2022 fell 44 cents to C$106.02.

Canadian government and provincial bonds are underperforming global peers by the widest margin in six months as the nation’s 25-year commodity-fueled expansion shows signs of faltering as global-growth optimism increases.

Indexes of debt issued by Canada’s federal and provincial governments lost one percent in January, the biggest monthly declines since November 2010 and the most relative to sovereign peers since August, Bank of America Merrill Lynch data show.

Hedge funds and other large speculators decreased their bets that the Canadian dollar will gain against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers on an advance in the Canadian dollar compared with those on a drop -- so-called net longs -- was 35,057 on Jan. 29, compared with 57,952 a week earlier.

Economic Data

The currency rose yesterday after the Canadian economy grew 0.3 percent in November, following a gain of 0.1 percent the month before, Statistics Canada said yesterday in Ottawa. The median forecast in a Bloomberg economist survey was for a 0.2 percent expansion.

Canada’s unemployment rate may have increased to 7.2 percent in January from 7.1 percent the month before, according to the median in a Bloomberg News survey of 20 economists before the Statistics Canada report Feb. 8. Jobs growth slowed to 5,000 from 31,200 the month before, a separate survey showed.

The Canadian dollar briefly erased losses today after a government report showed job gains for the past two months in America. U.S. employment grew by 157,000 in January, after a revised increase of 196,000 the month before.

“The only upside was the revision higher for previous months and that’s considered a positive for the Canadian dollar,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia, by phone from Toronto. “We’re still close to that range we’ve seen for a long time, with the Canadian dollar and U.S. dollar hovering around parity.”

The loonie has declined 3.2 percent during the past six months among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The greenback fell 4.2 percent.