The Canadian dollar fell against 12 of its 16 most-traded currencies as crude oil, the country’s biggest export, and stocks weakened.
The currency strengthened earlier today against the U.S. dollar as a report showed housing starts exceeded forecast last month. It fell last week after Canada reported 54,500 fewer jobs in March, the biggest monthly employment decline since the country was in recession in 2009.
“We’ve had a sharp reversal in oil prices, which is weighing on a Canadian dollar already suffering from a weaker economy,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc., by phone from Toronto. “For a long time, the domestic economy was doing better than the global economy. But now, the global economy is finding its footing and the Canadian economy is continuing to weaken, which suggests the Bank of Canada will stay on hold.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, was little changed at C$1.0158 per U.S. dollar at 10:42 a.m. in Toronto. One loonie buys 98.45 U.S. cents.
Crude oil, the nation’s largest export, declined 0.1 percent to $93.23 a barrel in New York, after gaining as much as 0.5 percent. The Standard & Poor’s 500 Index of stocks was little changed after rising as much as 0.2 percent.
Yields on Canadian benchmark 10-year government bonds dropped to 1.75 percent today from 2.07 percent on Feb. 4. The benchmark hit a six-decade low of 1.565 percent on July 23, 2012, according to data compiled by Bank of Canada and Bloomberg. The 1.5 percent note maturing in June 2023 added 11 cents to C$97.67.
The Bank of Canada will auction C$2.7 billion ($2.7 billion) of securities maturing August 2016 tomorrow.
BlackRock Inc. predicted Canadian 10-year benchmark bond yields may fall to the lowest since at least the 1950s as a sputtering economy douses expectations the Bank of Canada will increase borrowing costs this year.
Slowing growth will cap yields at 1.25 percent to 1.75 percent for the remainder of the year, buoying prices of longer- maturity securities, according to Aubrey Basdeo, head of Canadian fixed-income at the world’s biggest money manager’s Toronto unit.
“The Canadian economy will remain weak as a result of intensifying domestic and external headwinds,” Basdeo said in a telephone interview yesterday. “You should be positioned for a long bias rather than a short bias at this point.”
The 25-basis point reduction puts BlackRock’s yield call below any forecast in Bloomberg surveys of economists, which range from 1.7 percent to 3 percent yields by the end of the year and average 2.34 percent.
A report showed Canadian building permits rose for a second month in February on a rebound in non-residential projects. The value of municipal permits rose 1.7 percent to C$5.95 billion ($5.86 billion), Statistics Canada said today in Ottawa. Economists forecast a 3 percent gain according to the median of nine responses to a Bloomberg survey.
The Canadian dollar has lost 0.5 percent this year against nine other developed-nation currencies tracked by the Bloomberg Correlation Weighted Index. The U.S. dollar gained 2.2 percent and the euro rose 1 percent.
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