2013.06.2605:04:30UTC+00Loonie declines as U.S. economic power supports fed view

The Canadian dollar pulled back versus most of its major counterparts after reports displayed that the U.S. economy is strengthening, empowering assumptions that the nation’s biggest trading partner has room to slow financial stimulus.

Economic Data

Bookings for U.S. goods meant to last at least three years climbed 3.6 percent for a second month, the Commerce Department reported today in Washington.

China Demand

Canada’s commodity-driven economy is being undermined by slowing demand from China, the world’s biggest consumer of metals and energy, while exports of crude oil are hampered by pipeline bottlenecks.

A government report due June 28 is forecast to show gross domestic product growth in April slowing to an annualized pace of 1.4 percent from 1.7 percent in March.

“Canada underperforming growth in the U.S. this year has been a major theme for the year, so GDP becomes a very important data print,” Sutton said.

The Standard & Poor’s GSCI Index of 24 commodities has fallen 5.4 percent this year. Crude-oil futures were 0.1 percent higher at $95.28 per barrel in New York, after rising as much as 1 percent.

“If the commodity selloff does pick up, then the Canadian dollar has more room to fall,” Moore said. TD downgraded its Canadian-dollar forecast in April to C$1.06 by the end of the first half and to C$1.10 at year-end.

The Canadian dollar has fallen 1.3 percent during the past month against nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index. It trails only the currencies of fellow commodities exporters New Zealand, Norway and Australia, down 4.2 percent, 4 percent and 3.8 percent. The U.S. dollar gained 0.8 percent.