By Chris Fournier Dec. 22 (Bloomberg) -- Canada’s dollar climbed against its U.S. counterpart for a third day on speculation an accelerating economic recovery will prompt the central bank to raise interest rates sooner than it expected. “The market is slowing starting to price in higher rates in Canada,” said Jonathan Gencher, Toronto-based director of foreign-exchange sales at Bank of Montreal, the nation’s fourth- largest bank. “The market has come back to thinking that Canada is going to head back toward parity” with the U.S. dollar. The Canadian currency strengthened 0.4 percent to C$1.0578 per U.S. dollar at 8:10 a.m. in Toronto, from C$1.0622 yesterday. One Canadian dollar buys 94.54 U.S. cents. Canada’s dollar, up 16 percent this year, outperformed all 16 of its major counterparts tracked by Bloomberg for a second consecutive day. Gross domestic product rose 0.3 percent in October, after climbing 0.4 percent in September, Statistics Canada is likely to say tomorrow, according to the median estimate of 20 economists in a Bloomberg survey. The Canadian currency is “once again leading the way overnight,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia, Canada’s third- largest lender. “The market is starting to get more positive on North American growth prospects overall. What’s good for the U.S. is very good for Canadian growth.” The Bank of Canada next meets on Jan. 19 to determine interest rates. Policy makers held the benchmark rate steady at a record low 0.25 percent at their last meeting on Dec. 8 and reiterated a pledge to leave it there though June 2010, barring a change in the inflation outlook. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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