Canadian dollar headed for the biggest weekly loss in a month against the dollar

Canadian dollar headed for the biggest weekly loss in a month against the dollar as investors speculated the central bank will not raise interest rates until late next year and crude oil, the mainstay of country's exports, fell.

The Canadian dollar as Canada's currency is nicknamed, has declined 0.5 percent in the last five days. Bank of Canada Governor, Mark Carney, kept the benchmark interest rates steady at 1 percent on 07 December for the second consecutive meeting, highlighting the threats to economic recovery.

"The statement of the Bank of Canada this week will be a drag on the currency, because there is absolutely nothing out there for rate hikes for the foreseeable future," said John Curran, a senior vice president based in Toronto in CanadianForex Ltd ., an online distributor of foreign exchange. "At least the second quarter of next year. Most people are probably looking for the third quarter."

The Canadian currency traded at C $ 1.0093 per U.S. dollar at 12:29 am in Toronto, compared with C $ 1.0106 yesterday. It closed at C $ 1.0039 on December 3, when it reached C $ 1.0003, the highest since Nov. 11. One Canadian dollar buys 99.01 U.S. cents.

Oil, which accounts for 21 percent of the Bank of Canada material Price Index, the largest single component, is directed to a drop of 1.7 percent this week on concern that moves by the People's Bank of China to counter inflation below the demand for raw materials. January crude oil futures fell 0.8 percent today to $ 87.64 a barrel in New York after touching $ 90.76 on 7 December, the highest since October 2008.

Commodities Slip

The Reuters-Jefferies CRB Index of commodities fell 0.3 percent today, headed for a weekly loss. The Canadian dollar has risen 4.3 percent this year, partly by demand from the nation's commodities, including gold, crude oil, copper, lumber and wheat, representing about half of their export earnings .

The Canadian currency rose even more than most of their counterparts today as the euro fell on speculation Europe's sovereign debt crisis will worsen and the U.S. dollar rose to Consumer confidence rose more than expected. America is the largest trading partner of Canada.

"Oil has softened, but still I think the Canadian dollar to continue to hover around here." Blake said Jespersen, director of foreign exchange at Bank of Montreal in Toronto. "We have a lot of interested vendors between C and C $ 1.0130 and $ 1.0150 a lot of buyers for C $ 1.0050 down to parity, but we've been stuck in this range."

The Canadian dollar reached last base one by one with the U.S. dollar five days from 5 November.

Beware increases

The Bank of Canada said in its statement this week that will remain wary of future increases in interest rates decline in exports and the crisis of European sovereign debt hinder economic recovery.

"A combination of disappointing productivity performance and continued strong Canadian dollar could slow the expected recovery in net exports," the bank said.

Policy makers kept the key rate on overnight loans by 1 percent during the first half of 2011 and raise it to 1.5 percent in the third quarter, according to the median forecast in a survey of 23 economists and analysts.

The first central bank remained unchanged in borrowing costs in October after three successive increments of a quarter percentage point at each start June 1, when he became the first among the Group of Seven countries to raise rates interest since July 2008.

Canada's trade deficit fell to C $ 1,710,000,000 (1.69 billion U.S. dollars) from a revised C $ 2,310,000,000 in September to record exports of copper and precious metals, the national statistics agency said. The surplus with the U.S. was reduced to the smallest since 1992. Economists surveyed by us News predicted an October deficit of C $ 2.1 billion.

Inflation in China

The People's Bank of China increased reserve requirements by 50 basis points from December 20, the central bank said on its website today. It was the third increase in five weeks.

Consumer prices in China rose 4.7 percent in November from the previous year, a report tomorrow will show statistics, according to the median forecast in a survey amid speculation that the Asian nation will tighten policy monetary.

The index of Thomson Reuters / University of Michigan preliminary consumer sentiment USA rose to 74.2, a maximum of six months, from 71.6 in late November. Economists forecast a reading of 72.5.

The euro fell today against most of its partners as leaders of Germany and France said they are against increased funding to quell the crisis of sovereign debt before next week's summit of EU leaders.