BLBG: Canada’s Dollar Rises From One-Month Low as Stocks, Oil Climb
By Chris Fournier
Nov. 2 (Bloomberg) -- Canada’s dollar advanced from its lowest level in a month against its U.S. counterpart after equities and commodities including crude oil increased, making currencies tied to risk more attractive.
“There are better reasons to buy equities than to sell them,’’ said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “Risk appetite should be on the table and should contribute to better gains in risk- related currencies like the Canadian dollar.’’
The Canadian currency appreciated 0.5 percent to C$1.0794 per U.S. dollar at 8:27 a.m. in Toronto, from C$1.0848 on Oct. 30. One Canadian dollar buys 92.57 U.S. cents. The currency touched C$1.0870 earlier today, the weakest level since Oct. 2.
The loonie, which gained 19 percent this year to Oct. 19, dropped 4.8 percent since then as officials including Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty warned that a stronger exchange rate versus the U.S. dollar jeopardizes the nation’s recovery. The currency also weakened as investors speculated that rallies in global stocks and commodities may be overdone.
Standard & Poor’s 500 Index futures expiring in December rose 0.5 percent today. The Canadian dollar has a one-year correlation coefficient of 0.70 with the S&P 500, compared with 0.50 with crude oil. A reading of 1 would mean the instruments move in lock step.
Crude Oil Gains
Crude oil for December delivery rose 1.1 percent to $77.88 a barrel in electronic trading on the New York Mercantile Exchange. Crude, Canada’s biggest export, gained 74 percent this year. Canada is the biggest supplier of energy products to the U.S., its largest trading partner, according to the Energy Information Administration.
Canadian employers added 10,000 jobs last month, compared with a gain of more than 30,000 in September, and the unemployment rate probably rose to 8.5 percent, from 8.4 percent, according to the median estimates in Bloomberg surveys of economists. Statistics Canada is due to release the data at 7 a.m. in Ottawa on Nov. 6.
Monetary-policy decisions by the Federal Reserve, the European Central Bank and the Bank of England may also move markets this week.
“There’s a tremendous amount of event risk on the table this week,’’ Spitz said.
The Federal Open Market Committee will probably say on Nov. 4 that it will keep the benchmark interest rate unchanged at zero to 0.25 percent, according to all of the 87 economists in a Bloomberg survey.
The European Central Bank and the Bank of England will leave their benchmark interest rates at record lows of 1 percent and 0.5 percent respectively the next day, economists expect.
