Canada Dollar Falls Against Most Peers as U.S. Retail Sales Slow
January 13, 2012, 8:16 AM ESTBy Cecile Gutscher and Chris Fournier
Jan. 12 (Bloomberg) -- Canada’s dollar declined against most of its major counterparts amid concern economic growth may be less than forecast in the U.S., the nation’s largest trading partner.
The loonie, as the currency is nicknamed, weakened after sales at U.S. retailers in December rose 0.1 percent, restrained by cheaper fuel prices and holiday discounting that helped hold down the value of goods sold. Canada’s dollar erased earlier gains against its U.S. counterpart on comments by the European Central Bank President that the region’s debt crisis is easing.
“The Canadian dollar is weaker in tandem with the U.S.,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone from Toronto.
The currency was little changed at C$1.0191 per U.S. dollar at 5 p.m. Toronto time, after gaining has much as 0.6 percent. One Canadian dollar buys 98.13 U.S. cents.
The Standard & Poor’s 500 Index climbed 0.2 percent, erasing a decline of as much as 0.5 percent. The MSCI World Index of equities in developed nations rose 0.3 percent. Crude oil for February delivery dropped 1.8 percent to $99.19 a barrel.
Bonds Fall
Canadian 10-year government bonds fell, pushing the yield up four basis points, or 0.04 percentage point, to 1.98 percent. The 3.25 percent securities maturing in June 2021 fell 38 cents to C$110.84.
The yield touched 1.837 percent on Dec. 16, the lowest level in data compiled by Bloomberg going back to 1989. The premium to equivalent-maturity U.S. Treasuries is five basis points, compared with 32 basis points on Sept. 5, the most in 2011, and 17 basis points less than at the end of 2010.
There are “tentative signs” of economic stabilization in the euro area, ECB President Mario Draghi said in Frankfurt, pointing to auctions of Italian and Spanish debt this week.
“Successful Italian and Spanish bond auctions have markets giddy that ECB lending is finally working its way through to the vulnerable European bond markets,” Scotia Capital analysts led by Camilla Sutton in Toronto wrote in a note to clients. “This is positive for risk assets and has helped support a rally today.”
Spain’s debt auction drew demand for 9.98 billion euros ($12.8 billion) of bonds maturing in 2015 and 2016, twice its maximum target. Italy sold 12 billion euros of Treasury bills today, meeting its target.
The loonie gained 1.2 percent during the past month, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-nation currencies. The U.S. dollar lost 0.6 percent, and the euro fell 2.4 percent.
--Editors: Paul Cox, Kenneth P:ringle
To contact the reporters on this story: Cecile Gutscher in Toronto at cgutscher@bloomberg.net; Chris Fournier in Halifax, Nova Scotia, at cfournier3@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
