“People could be hesitant to put on risk positions ahead of September because there is significant event risk being built up in market participants in relation to tapering,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said by phone.
Canada’s dollar lost 2.5% in the past three months versus nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The currencies of Australia and New Zealand, fellow commodity exporters, slid 12% and 5%. The greenback rose 1.6%.
Standard & Poor’s GSCI index of raw materials fell 0.8%, and the S&P 500 Index of stocks declined 0.4%. Crude-oil futures dropped 1.1% to $104.15 a barrel in New York and touched $104.12, the lowest in a week.
The discount to the North American benchmark price for Canadian heavy oil was $22.50 after closing yesterday at $23.25, the most since May. The discount shrank in June to $9.25, its narrowest this year.
“We’re getting less dollars for each barrel than we were previously,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc., said by phone from New York. “That means less flows, less U.S. dollars that need to be converted into Canadian dollars, so that’s reduced the demand for the Canadian dollar.”
The loonie reached its weakest level of the day after Statistics Canada reported that the value of municipal building permits fell 10.3%, more than three times economists’ median forecast in a Bloomberg survey, to C$6.65 billion in June. The figure, which was the lowest since March, followed a revised 5.8% gain in May.
“The government and the BOC still have a lot of heavy lifting to do in getting the housing market in line with underlying fundamentals,” Adrian Miller, director of fixed- income strategies at GMP Securities LLC in New York, said in a client report.
Canada’s Ivey purchasing managers’ index unexpectedly decreased. The gauge was 48.4 in July on a seasonally adjusted basis, following a June reading of 55.3, according to a statement on the website of Western University’s business school. A Bloomberg survey predicted 57. Readings of more than 50 indicate purchasing by governments and companies advanced.