Canada’s Dollar Falls Most in 4 Weeks as Dubai Spurs Selling

By Chris Fournier

Nov. 26 (Bloomberg) -- Canada’s dollar weakened against its U.S. counterpart by the most since Oct. 30 as Dubai’s plan to reschedule its debt spurred a sell-off in crude oil, gold and equities.

The Canadian currency fell 1.3 percent to C$1.0589 per U.S. dollar at 5:11 p.m. in Toronto, from C$1.0453 yesterday, when it reached C$1.0451, the strongest level since Nov. 18. One Canadian dollar buys 94.43 U.S. cents.

“Lower equities, gold and crude combined have pushed the Canadian dollar lower in early trading,” said Michael Leavitt, a Montreal-based institutional-derivatives broker at MF Global Canada Co.

Dubai World, with $59 billion of liabilities, sought a “standstill” agreement from creditors. Its debt includes $3.52 billion of bonds due Dec. 14 from property unit Nakheel PJSC.

“The Dubai World restructuring news has caught the market’s collective attention in a big and not so nice way,” Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto wrote in a note to clients. The news has “momentarily shaken confidence and as a result commodities and all risk-related vehicles are being sold off.”

Crude for January delivery fell 2.2 percent to $76.23 a barrel in electronic trading on the New York Mercantile Exchange. Gold for immediate delivery slid $3.42 to $1,188.38 an ounce in London, after reaching a record for the third time this week. Canada relies on raw materials for more than half its export revenue.

Stocks Slump

The MSCI World Index, a gauge of equities in 23 developed nations, fell 1.4 percent. Europe’s Stoxx 600 Index tumbled 3.2 percent, the most in 7 months.

U.S. markets are closed today for Thanksgiving, which may lead to “slow trading” in the Canadian dollar, said Leavitt.

Canada’s dollar, nicknamed the loonie, is up 15 percent this year on a rebound in commodity prices. The currency will appreciate to C$1.03 against the greenback by the end of the first quarter next year, according to the median forecast of 35 economists in a Bloomberg News survey.

Government bonds rose, pushing the 10-year’s yield down six basis points, or 0.06 percentage point, to 3.20 percent, the lowest since May 20. The price of the 3.75 percent security maturing in June 2019 rose 49 cents to C$104.52.