By Chris Fournier Sept. 17 (Bloomberg) -- Canada’s dollar appreciated to the highest since October versus its U.S. counterpart as speculation that the global recession is over boosted appetite for higher- yielding assets including commodity-linked currencies. “Risk is back in the market,” said Andrew Chaveriat, a technical analyst in New York at BNP Paribas SA. “The Canadian dollar and some of the other commodity currencies are catching up a bit.” The currency, nicknamed the loonie, strengthened 0.2 percent to C$1.0637 per U.S. dollar at 9:54 a.m. in Toronto, from C$1.0659 yesterday. It touched C$1.0606, the strongest level since Oct. 1. One Canadian dollar buys 94.01 U.S. cents. The loonie appreciated 14 percent against the U.S. dollar this year after losing a record 18 percent in 2008. Its strength is creating “headwinds” that threaten the nation’s economic recovery, Bank of Canada Deputy Governor John Murray said on Sept. 15 in Berlin. A stronger Canadian dollar makes the nation’s exports more expensive. Bank of Canada policy makers held the benchmark interest rate at a record low of 0.25 percent last week and reiterated a pledge to keep it there through June 2010 unless the inflation outlook shifts. They are next scheduled to meet on interest rates on Oct. 20. Canada’s index of leading economic indicators rose 1.1 percent in August, the most since 2002, a sign the economy is in the early stage of a recovery, Statistics Canada said. ‘Bearish Sentiment’ “We are watching the key daily support level at C$1.0633 on a closing basis now,” George Davis, chief technical analyst for fixed-income and currency strategy at RBC Capital Markets in Toronto, wrote in a note. A close below that level would “add to bearish sentiment” for the U.S. dollar versus Canada’s and highlight the C$1.0500 region, he wrote. Canada’s dollar pared gains after a government report showed inflation fell more than economists expected and as oil and copper declined. Canada derives more than half its export revenue from raw materials. “We didn’t get any follow through on the strength in the Canadian dollar,” Chaveriat said. “Crude and copper just stalled. That could be holding the Canadian dollar back a little bit.” Chaveriat predicts a daily close stronger than C$106.35 and gains in copper and oil could boost the loonie to between C$1.03 and C$1.05 versus the greenback. Canada’s consumer prices fell 0.8 percent in August from a year earlier as gasoline costs plunged. Economists surveyed by Bloomberg expected a 0.7 percent decline, based on the median of 20 estimates. Crude oil for October delivery fell 22 cents to $72.29 a barrel in New York. Copper futures for December delivery dropped 1.2 percent to $2.9015 a pound.

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