By Whitney Kisling
Feb. 4 (Bloomberg) -- Canada’s currency weakened, paring some of yesterday’s gain, as the global recession led more investors to take refuge in the U.S. dollar.
“The main catalyst so far today has been the broad-based strength in the U.S. dollar,” said George Davis, chief technical analyst at RBC Capital Markets in Toronto. “Yesterday we saw a fairly sharp rally in the Canadian dollar, and it was starting to get a little bit overextended.”
The loonie, as Canada’s dollar is known, declined 0.9 percent to C$1.2386 per U.S. dollar at 8:34 a.m. in Toronto, from C$1.2296 yesterday. The Canadian dollar appreciated yesterday as equities and crude oil climbed, reducing the comparative appeal of the U.S. dollar as a haven. One Canadian dollar buys 80.88 U.S. cents.
Government reports later this week may show the unemployment rate rose to 7.5 percent in the U.S. and 6.8 percent in Canada, according to the median estimate of economists surveyed by Bloomberg, increasing demand for the safest assets.
Canada’s currency will weaken to C$1.26 against the U.S. dollar by the end of March and remain there through the end of June, according to the median forecast in a Bloomberg News survey of 42 economists.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net
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