BLBG: Canadian Dollar Appreciates for Second Day on ‘Recovery Story’
Canada’s currency gained for a second day against its U.S. counterpart as global stocks rose and crude oil climbed above $60 a barrel, burnishing the appeal of commodity-linked currencies.
“It’s all part of the recovery story,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “I see the Canadian dollar appreciating pretty sharply in the next year or so. If you do get U.S. dollar weakness, you’re going to get higher commodity prices.”
The Canadian dollar strengthened 0.5 percent to C$1.1574 per U.S. dollar at 9:41 a.m. in Toronto, from C$1.1635 yesterday. The currency touched C$1.1548, the strongest in a week. One Canadian dollar buys 86.40 U.S. cents.
The loonie, as Canada’s currency is known, pared gains after the Commerce Department in Washington said U.S. builders broke ground on the fewest homes on record in April. Housing starts fell 13 percent last month to an annual rate of 458,000.
The MSCI World Index, a benchmark gauge for 23 developed markets, rose 1.1 percent. The Standard & Poor’s 500 Index was up 0.2 percent.
Crude oil for June delivery climbed as much as 2.5 percent to $60.48 a barrel on the New York Mercantile Exchange, the highest since Nov. 11. Commodities accounted for 56 percent of Canada’s export revenue last year.
“The bounce in commodities would not be complete without a bounce in commodity-bloc currencies,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. Optimism that some U.S. banks will repay government bailout funds contributed to broad U.S. dollar weakness, he said.
U.S. Dollar Weakens
Against the greenback, the dollars of New Zealand and Australia were the best and third-best performers among the most-traded currencies tracked by Bloomberg, gaining 1 percent and 0.7 percent, respectively. The U.S. dollar fell against all of the major currencies except Sweden’s krona.
Bank of Canada Deputy Governor John Murray is due to speak in Philadelphia at noon New York time. His remarks will be published on the central bank’s Web site at 11:45 a.m.
