BLBG: Canadian Currency Climbs to Two-Week High as Oil, Stocks Gain
By Chris Fournier
Dec. 1 (Bloomberg) -- Canada’s dollar appreciated to the highest level in more than two weeks against its U.S. counterpart as renewed appetite for higher-yielding assets burnished the appeal of currencies tied to growth.
The Canadian dollar is benefiting from a “risk-back-on trade,” said Firas Askari, head currency trader in Toronto at Bank of Montreal, Canada’s fourth-largest lender, citing higher prices for stocks and commodities such as oil.
Canada’s currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, strengthened 1.2 percent to C$1.0437 at 10:34 a.m. in New York, compared with C$1.0562 yesterday. It touched C$1.0425 per U.S. dollar, the strongest level since Nov. 12. One Canadian dollar buys 95.82 U.S. cents.
China’s manufacturing grew last month at the fastest pace in five years, a survey showed. The purchasing managers’ index released by HSBC Holdings rose to a seasonally adjusted 55.7 from 55.4. Manufacturing in Europe grew more than expected, according to a London-based Markit Economics index.
“Markets moved to ‘risk on’ mode once again,” Shane Enright in Toronto and Adam Fazio in New York, Canadian Imperial Bank of Commerce currency strategists, wrote in a report to clients today. The data from China and Europe “boosted hopes of a sustainable economic recovery.”
The loonie will advance to C$1.03 by the end of the first quarter of 2010, according to the median forecast of 38 economists and analysts surveyed by Bloomberg News.
Watching C$1.0425
Traders are watching the C$1.0425 level to “see if it holds yet again,” said BMO’s Askari, referring to recent failures by the currency to strengthen beyond that.
The Canadian dollar gained 17 percent this year against the greenback on a rebound in commodity prices. It fell a record 18 percent last year.
Government bonds were little changed, with the Canadian 10- year note’s yield rising one basis point, or 0.01 percentage point, to 3.23 percent. The price of the 3.75 percent security maturing in June 2019 fell 11 cents to C$104.19. Canada’s government debt made investors 0.3 percent this year, according to a Merrill Lynch index.
Crude oil for January delivery gained as much as 2 percent to $78.85 a barrel on the New York Mercantile Exchange. Crude, Canada’s largest export, rose 76 percent this year.
The Standard & Poor’s 500 Index rose 1 percent. The MSCI World Index, a gauge of equities in 23 developed nations, climbed 1.7 percent.
Canadian employers likely added a net 15,000 jobs in November, from a 43,200-position decline in payrolls the previous month, according to the median forecast of 20 economists in a Bloomberg News survey. Statistics Canada is scheduled to release the data at 7 a.m. on Dec. 4.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
