Canadian Currency Falls Most Since February as Stocks, Oil Drop
April 18, 2010, 6:24 PM EDT
April 17 (Bloomberg) -- Canada’s dollar posted its biggest five-day decline in seven weeks as stocks and crude oil tumbled after U.S. regulators sued Goldman Sachs Group Inc. for fraud, damping the appeal of higher-yielding assets.
The currency, which soared last week to parity versus its U.S. counterpart for the first time since July 2008, fell before the Bank of Canada meets on April 20 on interest rates. The nation depends on raw materials including oil for about half of its export revenue.
“It’s basically the blowback from this Goldman story and just general sentiment toward risk assets,” said David Tien, a money manager in New York who helps Fischer Francis Trees & Watts invest $19 billion. “The particulars in Canada, there’s nothing wrong there and it’s all quite good -- it’s just questions about the general environment.”
The Canadian currency depreciated 1 percent, the most since Feb. 26, to C$1.0128 per U.S. dollar yesterday, from C$1.0027 on April 9. It touched 99.54 Canadian cents on April 14, the strongest level since June 2008. One Canadian dollar purchases 98.74 U.S. cents.
Traders sold Canadian dollars yesterday to cover bets that the loonie would rise against the yen, said CJ Gavsie, managing director for foreign-exchange trading in Toronto at Bank of Montreal. The Japanese currency surged against all of its most- traded counterparts tracked by Bloomberg. The Canadian currency fell 2 percent to 91 yen, from 92.83 yen a day earlier.
‘Mad Rush’
“Everybody got out of that trade in a hurry,” Gavsie said. “There was a mad rush to bail out.”
The loonie, as the currency is nicknamed for the image of the aquatic bird on the C$1 coin, fell for the week against 14 of its 16 most-traded counterparts. The Australian and New Zealand dollars and the South African rand, all currencies of commodity-exporting countries, joined Canada’s dollar among the four worst performers.
Crude oil, Canada’s biggest export, dropped the most in a week since Feb. 5. Crude for May delivery fell 2 percent to $83.24 a barrel on the New York Mercantile Exchange.
The Standard & Poor’s 500 Index ended a string of six weekly gains, slipping 0.2 percent. Financial equities led the market lower yesterday, with Goldman Sachs shares plunging as much as 15.6 percent, the most in 15 months.
‘Temporary Thing’
“Our perspective is this is a temporary thing,” said Fischer Francis’s Tien. “We’ve had a very long run just in U.S. equities and that expands to general global equity markets, and it’s quite natural to have a bit of a pullback here on the equity side.”
The Securities and Exchange Commission sued Goldman Sachs for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The firm misstated and omitted key facts, the regulator said. Goldman Sachs said in a statement the charges “are completely unfounded.”
Canadian government bonds fell for the week, pushing up the yield on Canada’s benchmark 10-year note three basis points, or 0.03 percentage point, to 3.68 percent for the highest weekly close since November 2008. The price of the 3.75 percent security due in June 2019 decreased 24 cents to C$100.54.
Canada’s dollar is among the best-performing major currencies this year as the nation’s economy has accelerated out of recession and speculation grew that interest rates may rise faster than in other developed countries.
U.S., Canada Rates
Policy makers will raise the rate to 1.25 percent by year- end, according to a Bloomberg survey. The U.S. Federal Reserve will increase its benchmark to 0.75 percent, from a current range of zero to 0.25 percent, another Bloomberg survey showed.
Canadian factory sales increased less than economists forecast in February, a report yesterday from the nation’s statistics agency showed. They rose 0.1 percent, compared with a median forecast in a Bloomberg survey for a 1 percent gain.
The nation posted a fifth straight trade surplus in February, the longest series since November 2008, another Statistics Canada report showed on April 13. A Bank of Canada survey released a day earlier showed the nation’s businesses expect sales growth over the next year.
April 18, 2010, 6:24 PM EDT
April 17 (Bloomberg) -- Canada’s dollar posted its biggest five-day decline in seven weeks as stocks and crude oil tumbled after U.S. regulators sued Goldman Sachs Group Inc. for fraud, damping the appeal of higher-yielding assets.
The currency, which soared last week to parity versus its U.S. counterpart for the first time since July 2008, fell before the Bank of Canada meets on April 20 on interest rates. The nation depends on raw materials including oil for about half of its export revenue.
“It’s basically the blowback from this Goldman story and just general sentiment toward risk assets,” said David Tien, a money manager in New York who helps Fischer Francis Trees & Watts invest $19 billion. “The particulars in Canada, there’s nothing wrong there and it’s all quite good -- it’s just questions about the general environment.”
The Canadian currency depreciated 1 percent, the most since Feb. 26, to C$1.0128 per U.S. dollar yesterday, from C$1.0027 on April 9. It touched 99.54 Canadian cents on April 14, the strongest level since June 2008. One Canadian dollar purchases 98.74 U.S. cents.
Traders sold Canadian dollars yesterday to cover bets that the loonie would rise against the yen, said CJ Gavsie, managing director for foreign-exchange trading in Toronto at Bank of Montreal. The Japanese currency surged against all of its most- traded counterparts tracked by Bloomberg. The Canadian currency fell 2 percent to 91 yen, from 92.83 yen a day earlier.
‘Mad Rush’
“Everybody got out of that trade in a hurry,” Gavsie said. “There was a mad rush to bail out.”
The loonie, as the currency is nicknamed for the image of the aquatic bird on the C$1 coin, fell for the week against 14 of its 16 most-traded counterparts. The Australian and New Zealand dollars and the South African rand, all currencies of commodity-exporting countries, joined Canada’s dollar among the four worst performers.
Crude oil, Canada’s biggest export, dropped the most in a week since Feb. 5. Crude for May delivery fell 2 percent to $83.24 a barrel on the New York Mercantile Exchange.
The Standard & Poor’s 500 Index ended a string of six weekly gains, slipping 0.2 percent. Financial equities led the market lower yesterday, with Goldman Sachs shares plunging as much as 15.6 percent, the most in 15 months.
‘Temporary Thing’
“Our perspective is this is a temporary thing,” said Fischer Francis’s Tien. “We’ve had a very long run just in U.S. equities and that expands to general global equity markets, and it’s quite natural to have a bit of a pullback here on the equity side.”
The Securities and Exchange Commission sued Goldman Sachs for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The firm misstated and omitted key facts, the regulator said. Goldman Sachs said in a statement the charges “are completely unfounded.”
Canadian government bonds fell for the week, pushing up the yield on Canada’s benchmark 10-year note three basis points, or 0.03 percentage point, to 3.68 percent for the highest weekly close since November 2008. The price of the 3.75 percent security due in June 2019 decreased 24 cents to C$100.54.
Canada’s dollar is among the best-performing major currencies this year as the nation’s economy has accelerated out of recession and speculation grew that interest rates may rise faster than in other developed countries.
U.S., Canada Rates
Policy makers will raise the rate to 1.25 percent by year- end, according to a Bloomberg survey. The U.S. Federal Reserve will increase its benchmark to 0.75 percent, from a current range of zero to 0.25 percent, another Bloomberg survey showed.
Canadian factory sales increased less than economists forecast in February, a report yesterday from the nation’s statistics agency showed. They rose 0.1 percent, compared with a median forecast in a Bloomberg survey for a 1 percent gain.
The nation posted a fifth straight trade surplus in February, the longest series since November 2008, another Statistics Canada report showed on April 13. A Bank of Canada survey released a day earlier showed the nation’s businesses expect sales growth over the next year.