BLBG: Canada's Dollar Climbs for First Time This Week as Oil Rises
By Chris Fournier
Nov. 13 (Bloomberg) -- Canada's currency rose for the first time this week against its U.S. counterpart as the price of oil rebounded from the lowest in almost two years.
``Much of the move is due to oil prices,'' said David Watt, a senior currency strategist at RBC Capital Markets in Toronto. ``The market has come to grips with what is going on in oil prices. It is longer-term oil demand that is more pressing.''
The Canadian dollar strengthened as much as 1 percent to C$1.2260 per U.S. dollar, from C$1.2382 yesterday. It traded at C$1.2272 at 10:22 a.m. in Toronto. One Canadian dollar buys 81.53 U.S. cents.
The loonie, as Canada's dollar is known for the aquatic bird on the one-dollar coin, fell 2.5 percent yesterday and has declined 14 percent this quarter. Crude, which accounts for about a tenth of export revenue, has lost 38 percent in a year. It last traded at $56.64 a barrel.
``It all comes down to broader risk appetite,'' said CIBC World Markets technical analyst Shane Enright in Toronto. ``If it improves, the Canadian dollar should benefit. Global equity stabilization is still the key. Commodities are also an issue.''
Canada's trade surplus shrank to C$4.49 billion ($3.65 billion) in September, more than forecast, as imports rose while prices for energy and metal exports fell, Statistics Canada said.
RBC Capital predicts Canada's currency will weaken to C$1.27 by the end of this year, as commodity prices fall and the outlook for the global economy dims.
The yield on the two-year government bond rose 2 basis points, or 0.02 percentage point, to 1.87 percent. The price of the 2.75 percent security due in December 2010 fell 4 cents to C$101.76.
The 10-year note's yield was little changed at 3.66 percent. The price of the 4.25 percent security maturing in June 2018 fell 4 cents to C$104.71.
The 10-year bond yielded 179 basis points more than the two- year security, down from 180 basis points yesterday, and 184 basis points on Nov. 6, when the so-called yield curve was the steepest since May 2004.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
