2013.08.3005:58:05UTC+00Canadian Dollar step down to lowest this week ahead of GDP report

Canada's dollar sag down to its worst position this week before a report tomorrow that may display the nation’s economy slouched in June the most since 2009, while an increase in U.S. growth lifted the case for that country to trim the pace of stimulus.

The Canadian currency powered down for a second day as data showed U.S. gross domestic product accelerated more than the primary forecast in the second quarter, lifting bets that the Federal Reserve will slow bond purchases that are considered negative for America’s currency. Canada’s dollar is on track for a monthly decline. Crude oil, the nation’s largest export, backslide from the topmost level in more than two years.

Bonds Increase

Government bonds rallied, reversing earlier declines and pushing yields on Canada’s benchmark 10-year securities down two basis point, or 0.02 percentage point, to 2.60 percent. The yields increased earlier to 2.68 percent. The price of the 1.5 percent debt due in June 2023 added 15 cents to C$90.57.

‘Relatively Slow’

“We have a period where there is a gradual pickup in U.S. growth and a relatively slow underlying trend in Canadian growth,” said Jens Nordvig, a managing director of currency strategy at Nomura Holdings Inc., by phone from New York. “The dollar-Canada cross is already responding to those changes, but we think that process has more to run.”

Crude Slides

Futures on crude oil, the country’s biggest export, slumped 1.7 percent to $108.20 a barrel in New York as the prospect of an imminent attack on Syria faded. U.K. Prime Minister David Cameron, the U.S.’s top ally, struggled to win parliamentary backing for military strikes to retaliate for the Syrian government’s alleged use of chemical weapons on its own people. Crude reached $112.24 yesterday, the highest since May 2011, amid speculation military strikes would disrupt the supply of oil from the Middle East.

Standard & Poor’s GSCI Index of 24 raw materials relinquished 0.8 percent in its first drop in six days.

Canada’s current-account deficit widened in the second quarter as the previous period’s figure was revised downward. The C$14.6 billion ($13.9 billion) gap compared with the revised shortfall of C$13.4 billion in the first quarter. The current account is the broadest measure of trade because it includes investments.