By Chris Fournier and Jamie McGee Dec. 11 (Bloomberg) -- Canada’s currency rose the most in three weeks as its U.S. counterpart fell, the domestic trade surplus narrowed in October less than analysts forecast and crude oil rallied. “The U.S. dollar is getting sold off across the board,” said Steven Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. “The data in Canada was better than expected, and the U.S. data, once again, was much worse than expected.” Canada’s dollar rose 1.8 percent to C$1.2352 per U.S. dollar at 4:52 p.m. in Toronto, from C$1.2569 yesterday. It increased 2.8 percent on Nov. 24. One Canadian dollar buys 80.96 U.S. cents. The U.S. greenback weakened against all of the 16 most actively traded currencies tracked by Bloomberg including the Canadian dollar. The domestic trade surplus narrowed for a second month in October to C$3.78 billion ($3.03 billion), Ottawa-based Statistics Canada said. The surplus was more than the C$3.3 billion forecast of 22 economists in a Bloomberg News survey. The U.S. trade deficit grew 1.1 percent to $57.2 billion in October, the Commerce Department reported in Washington. The median forecast of economists in a separate Bloomberg survey was for a deficit of $53.5 billion. “A better-than-expected trade report generally supports the currency, especially when it contrasts with a pretty dismal U.S. trade report out at the same time,” said Sal Guatieri, an economist at BMO Capital Markets in Toronto. Currency Outlook The Canadian dollar will finish the year at C$1.22, according to BMO, while Scotia Capital predicts the loonie will depreciate to C$1.25 by the end of 2009. The currency extended its gain today as crude oil climbed. The commodity, which generates about a tenth of the nation’s export revenue, rose 13 percent in New York and is headed for its best week since 1998. Crude oil for January delivery rose as much as $5.60 to $49.12 a barrel in New York on speculation world supplies are smaller than traders had estimated. Prices are up 16 percent this week. Gold rose to the highest in almost eight weeks. Commodities generate about half of Canada’s export revenue. The yield on the two-year government bond fell four basis points, or 0.04 percentage point, to 1.5 percent. The yield touched 1.466 percent on Dec. 5, the lowest since Bloomberg began compiling the data in 1989. The price of the 2.75 percent security due in December 2010 rose 6 cents to C$102.42. To contact the reporters on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net; Jamie McGee in New York at jmcgee8@bloomberg.net

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