Canada’s dollar advanced for a second day as an easing in investor risk aversion raised the allure of currencies of commodity-dependent economics and higher-yielding assets such as equities. Stocks worldwide rose and commodity prices advanced on speculation China will announce further stimulus measures. Canada’s dollar reached a four-year low on Oct. 28 at C$1.3017, and since then rose twice more to about C$1.30 before falling back, forming what traders call a “triple top.” “There’s significant resistance at that level,” said Benjamin Reitzes, an economist in Toronto at BMO Capital Markets, a unit of Canada’s fourth-largest bank. “Equity markets are strengthening and so the Canadian dollar is strengthening. The Canadian dollar climbed 0.6 percent to C$1.2850 per U.S. dollar at 9:03 a.m. in Toronto, from C$1.2930 yesterday. The currency yesterday touched C$1.2975, the weakest since Dec. 5. One Canadian dollar buys 77.82 U.S. cents. “It’s quite frustrating for Canadian dollar bears,” said Sacha Tihanyi, a Toronto-based currency strategist at Scotia Capital Inc. “The triple top has a lot to do with it from a technical perspective. Today’s better-performing commodity currencies and oil doesn’t help Canadian-dollar weakness either.” Chinese Premier Wen Jiabao will announce “a new stimulus package” in his annual address to the nation’s legislature tomorrow, former statistics bureau head Li Deshui told reporters in Beijing today. That would add to an existing 4 trillion yuan ($585 billion) spending plan as the government tries to revive growth in the world’s third-biggest economy. Global Stocks The MSCI World, an equity benchmark index for 23 developed markets, rose 0.4 percent to 708.31, the first gain in six days. Crude oil for April delivery was at $43.23 a barrel, $1.58 higher, in electronic trading on the New York Mercantile Exchange Prices have dropped 57 percent from a year earlier. Canada’s currency will rise to C$1.27 against the U.S. dollar by the end of the second quarter before strengthening further to C$1.22 by year-end, according to the median forecast in a Bloomberg News survey of 40 economists. The yield on the two-year government bond advanced three basis points, or 0.03 percentage point, to 1 percent. The price of the 2.75 percent security due in December 2010 fell 6 cents to C$103.01. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

Source