Canada Dollar Falls as Sales Fail to Offset Euro Concern

Canada’s dollar weakened to a four- month low versus its U.S. counterpart before European Union leaders meet as concern the euro bloc’s sovereign-debt crisis will worsen overshadowed greater-than-forecast retail sales. The currency fell for a second day as the sales gain failed to boost bets the Bank of Canada will raise interest rates by year-end. Higher-yielding currencies slumped as investors sought safety amid concern EU leaders will fail to provide new measures to stem the crisis. New Greek elections are scheduled June 17 after an anti-austerity party took second place in an inconclusive round of voting on May 6. “These numbers are certainly no disaster, but it’s just not strong enough to force a rethink of Bank of Canada policy thinking in markets,” Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities in Toronto, said of the sales data. “The general environment today is not particularly supportive, and it’s probably not going to be too supportive ahead of the Greek elections because of the uncertainty.” The Canadian currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, depreciated 0.8 percent to C$1.0284 per U.S. dollar at 10:40 a.m. in Toronto. It was the weakest level since Jan. 13. One Canadian dollar purchases 97.24 U.S. cents. The 14-day relative-strength index for the Canadian dollar versus the greenback fell to 27, suggesting the Canadian currency is headed for a reversal of recent losses. A reading below 30 signals a currency is oversold and may be poised for a correction. Retail sales increased 0.4 percent to C$39.1 billion ($38.2 billion) following a 0.2 percent drop the prior month, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News forecast an increase of 0.3 percent.