Canada’s dollar rose the most in almost four weeks as oil and gold climbed, enhancing the appeal of currencies tied to growth, and the International Monetary Fund cut its projection for global writedowns. “There was lots of good news,” said Steve Butler, director of foreign-exchange trading in Toronto at Scotia Capital Inc., a unit of Canada’s third-largest bank. “We need to see a close through C$1.0650 to give the Canadian-dollar bulls some confidence.” Investors should sell the Australian dollar versus the Canadian currency because expectations for interest-rate increases in Australia may be too high, while the Bank of Canada is unlikely to go beyond “weak verbal intervention,” Citigroup Inc. strategists recommended. The Canadian currency, nicknamed the loonie for the aquatic bird on the C$1 coin, strengthened as much as 1.6 percent to C$1.0672 per U.S. dollar, the biggest intraday advance since Sept. 4, before trading at C$1.0695 at 4:56 p.m. in Toronto. It closed yesterday at C$1.0846. One Canadian dollar buys 93.50 U.S. cents. The loonie posted a 2.2 percent advance this month after a 1.5 percent loss in August. It gained 8.8 percent from July through September, its second straight quarterly rise, and was 14 percent higher for the year. The U.S. dollar fell today against all but one of its 16 most-traded counterparts tracked by Bloomberg, South Africa’s rand, as the IMF cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion. The tally, released in a semiannual report, was based on a new methodology after criticism of an April estimate of about $4 trillion. GDP Unchanged Canada’s gross domestic product was unchanged in July from a month earlier, Statistics Canada said today in Ottawa. Economists expected a gain of 0.5 percent, according to the median estimate in a Bloomberg News survey of 21 analysts. Bank of Canada Governor Mark Carney said this week that policy makers will hold their key interest rate at a record low 0.25 percent through June 2010, depending on the outlook for inflation. “The longer-term outlook for Canadian dollar remains unchanged, with the pair still likely to make a move toward parity,” Jonathan Gencher, Toronto-based director of foreign- exchange sales at BMO Capital, a unit of Canada’s fourth-largest bank, wrote in a note to clients, referring to the loonie’s U.S. counterpart. Gencher recommends being short, or betting against, the U.S. dollar and “adding on rallies back to C$1.0780,” meaning buy the Canadian currency on dips. Crude Climbs Crude oil for November delivery advanced as much as 6 percent to $70.72 a barrel in electronic trading on the New York Mercantile Exchange after dropping earlier by 0.7 percent. Gold for immediate delivery rose as much as 1.7 percent to $1,009.45 an ounce. Canada draws more than half of its export revenue from raw materials. Canadian government bonds rose, pushing the 10-year note’s yield down two basis points, or 0.02 percentage point, to 3.31 percent. The price of the 3.75 percent security maturing in June 2019 increased 16 cents to C$103.60. Investors should sell the Australian dollar against the loonie, according to Citigroup. “Given recent Australian dollar outperformance, a failure from the Reserve Bank of Australia to validate market expectations could contribute to vulnerability on the crosses,” strategists Todd Elmer in New York and Michael Hart in London wrote in a note to clients today. The currency “looks particularly exposed” against the loonie, they wrote. The strategists bet against the South Pacific currency at 94.80 Canadian cents per Australian dollar, targeting a decline to 91.50, the note said. The Aussie traded at 94.39 Canadian cents in Toronto. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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