June 23 (Bloomberg) -- Canada’s currency weakened versus its U.S. counterpart as crude oil and global equities dropped on speculation global economic growth may falter, hampering appetite for higher-yielding assets.
The currency depreciated as much as 0.9 percent, the most in a week, after crude oil, Canada’s largest export, plunged more than 5 percent as the International Energy Agency announced that it will release 60 million barrels of oil from emergency stockpiles. The U.S. dollar rose against all but three of its most-traded counterparts.
“Oil has not been well correlated with the Canadian dollar recently but it may be more of a factor today,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto. “What has been more relevant for the Canadian dollar is the overall level of risk appetite and, with stocks down sharply today, I suspect that is why the U.S. dollar has popped higher versus the Canadian dollar.”
The loonie, as the currency is known for the aquatic bird on the dollar coin, fell 0.5 percent to 97.90 cents per U.S. dollar at 5:15 p.m. in Toronto, from 97.39 cents yesterday. Earlier it weakened as much as 0.9 percent. One Canadian dollar buys $1.0215.
Canada’s dollar pared its loss versus the greenback after European officials endorsed austerity measures proposed by Greek Finance Minister Evangelos Venizelos, according to a person familiar with the matter. That increased optimism the Mediterranean nation’s debt crisis will be resolved.
Stocks in developed nations as measured by the MSCI World Index declined 1.4 percent. Oil for August delivery declined as much as $5.72 to $89.69 a barrel in electronic trading, before rebounding to $92.35.
Federal Reserve Chairman Ben S. Bernanke cut the central bank’s growth forecast for the world’s largest economy yesterday and didn’t signal further stimulus, sending the greenback higher and riskier assets lower as investors sought shelter.
More Americans than forecast filed first-time claims for unemployment insurance payments last week, showing companies are less confident about the expansion than they were earlier this year. Applications for jobless benefits increased 9,000 in the week ended June 18 to 429,000, Labor Department figures showed today. The level of claims exceeded the highest estimate in a Bloomberg News survey in which the median projection called for 415,000 filings.
“The U.S. dollar strengthening off the back of the data this morning in what looks like a risk-aversion trade,” said Charles St-Arnaud, a foreign-exchange strategist at Nomura Holding Inc. in New York. “The way the Canadian dollar has been trading over the past couple of months is that it strengthens with good U.S. data and falls on weak U.S. data, given that so much of Canada’s exports go to the U.S., people play the trade link between the two countries.”
--Editor: Dave Liedtka, Greg Storey
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