Canadian Dollar Falls as Investors Abandon Risk, Commodities

By Daniel Kruger

Sept. 16 (Bloomberg) -- The Canadian dollar fell for a second day as investors sold commodities including crude oil and aluminum as part of a move toward less risky assets.

Concerns that global economic growth is slowing, reducing demand for natural resources, also weighed on the Canadian currency. Canada's dollar has fallen 5.9 percent against the U.S. currency since the price of crude oil peaked at $147.27 a barrel on July 11.

``The commodity cycle is still an important driver,'' said Matthew Strauss, a currency strategist at RBC Capital Markets in Toronto.

Canada's dollar, dubbed the loonie because of the aquatic bird on the one-dollar coin, fell 0.1 percent to C$1.0712 per U.S. dollar at 8:18 a.m. in Toronto, from C$1.0706 yesterday. One Canadian dollar buys 93.35 U.S. cents.

Crude oil for October delivery dropped 4.2 percent to $91.69 a barrel on the New York Mercantile Exchange. Earlier it reached $90.83, the lowest since Feb. 8.

The Canadian currency will slip to C$1.12 against the U.S. dollar by the end of 2009, according to the median forecast of 33 economists surveyed by Bloomberg News.

The U.S. dollar weakened versus the yen and euro as the debt-rating downgrade of American International Group Inc. fueled concern credit markets are seizing up after the collapse of Lehman Brothers Holdings Inc.

To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net