Canada's Dollar Little Changed After Wholesale Sales Climb

By Chris Fournier

Aug. 19 (Bloomberg) -- Canada's dollar was little changed after a report showed the country's wholesale sales rose at the fastest pace in more than a year, while commodities including crude oil and gold fell.

The Canadian currency traded at C$1.0659 per U.S. dollar at 9:54 a.m. in Toronto, from C$1.0646 yesterday. One Canadian dollar buys 93.81 U.S. cents. The currency has dropped 6.2 percent this year.

June wholesale sales advanced 2 percent, Statistics Canada said today, almost triple the 0.7 percent median forecast of 16 economists in a Bloomberg survey, as shipments of cars recovered after a strike. That compares with a revised gain of 1.5 percent in May.

``The number suggests a little more momentum in the economy than thought,'' said Sal Guatieri, a senior economist at Bank of Montreal in Toronto. ``If that strength held up, that would be positive for the loonie.''

After reaching parity with its U.S. counterpart in September for the first time in three decades, Canada's dollar sank to a one-year low last week and has lost 5.2 percent since crude oil reached a record $147.27 a barrel on July 11. Commodities such as crude account for about half of Canada's exports.

Crude for September delivery fell for a fourth day to as low as $111.64 a barrel, near the lowest in four months. Gold fell below $800 an ounce.

Commodity prices are playing a ``huge role,'' Guatieri said. ``The main driver of our currency is commodity prices. If they keep falling, so too will the loonie.''

Weaker Dollar

The loonie, as the Canadian currency is known because of the aquatic bird on the one-dollar coin, will weaken to C$1.070 by the end of this year, Guatieri predicts. Thirty economists surveyed by Bloomberg News anticipate the currency will weaken to C$1.10 by the end of 2009, according to the median forecast.

Canada's dollar ``failed to gain any support'' from today's wholesale report, Stewart Hall, a market strategist at HSBC Securities Canada in Toronto, wrote in a report today. He blamed that on the ``significant upside'' in U.S. producer price index, which rose twice as much as forecast in July, boosting the U.S. dollar against 13 of 16 major currencies.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net