Canada’s dollar rose to the highest in more than seven months as investors shunned the U.S. greenback in favor of currencies most likely to benefit from a rebound in global economic growth. The Canadian dollar posted its biggest weekly gain since October as currencies of countries that produce raw materials surged. The ICE’s U.S. Dollar Index dropped to the lowest this year on speculation the creditworthiness of the world’s largest economy is deteriorating. “This fear is driving gains in the Canadian dollar in that it’s causing the U.S. dollar to slide,” said Aaron Fennell, a Toronto-based futures and currency broker at MF Global Canada Co. “It’s pretty clear that the world continues to need hard assets, which Canada has.” Canada’s dollar, known as the loonie, advanced 1.6 percent to C$1.1193 per U.S. dollar at 4:43 p.m. in Toronto, compared with C$1.1374 yesterday. It touched C$1.1188, the strongest level since Oct. 9. One Canadian dollar buys 89.34 U.S. cents. The loonie extended gains after Statistics Canada said the nation’s retail sales rose in March for a third straight month. Overall sales advanced 0.3 percent to C$33.9 billion ($30 billion). Economists expected a 0.5 percent increase in March, based on the median of 21 estimates. Canada’s dollar climbed 5.2 percent since May 15, the most since the week ended Oct. 31. After reaching a four-year low on March 9, it gained 16 percent as investors stepped out of havens to seek higher-yielding assets such as stocks and commodity- linked currencies amid signs the global economic slowdown is moderating. ‘Quite Astonishing’ “The extent of the rally is quite astonishing,” said Matthew Strauss, a senior currency strategist at RBC Capital Markets in Toronto. “If U.S. dollar weakness continues, it could have far-reaching implications not only for the Canadian dollar, but for currencies across the world.” The dollars of New Zealand and Australia, which like the Canadian currency tend to track fluctuations in commodity prices and stocks, gained 6.1 percent and 4.7 percent, respectively, over the past five days against the greenback. Crude oil for July delivery rose as much as 1.5 percent to $61.98 a barrel on the New York Mercantile Exchange. Prices are up 38 percent this year. Crude, natural gas and other energy products accounted for 25 percent of Canada’s export revenue last year. North American stocks edged lower, with the Standard & Poor’s 500 Index losing 0.2 percent. U.S. Credit Rating The Dollar Index, used by the ICE to track the U.S. currency versus the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, declined 0.6 percent to 80.057 after touching 79.805, the lowest this year. Pacific Investment Management Co.’s Bill Gross said yesterday in an interview on Bloomberg Television the U.S. will “eventually” lose its AAA credit rating. The administration of President Barack Obama will sell a record $3.25 trillion of debt in the fiscal year ending Sept. 30 to fund a growing budget deficit, according to a Goldman Sachs Group Inc. estimate. “If the AAA rating is lost, then long-term interest rates would have to go up in order to encourage investment,” MF Global’s Fennell said. “That would really be a shock to the U.S. economy.” He recommends buying Canada’s currency on dips. Canadian Finance Minister Jim Flaherty said in a speech in Toronto today the fiscal situations of Canada’s federal and provincial governments are sustainable. Standard & Poor’s lowered its outlook on the U.K.’s AAA rating yesterday to “negative” from “positive.” The loonie will weaken to C$1.18 by the end of this year, according to the median forecast of 41 economists and analysts surveyed by Bloomberg News. Canadian government bonds lost investors 1.9 percent this year, according to a Merrill Lynch & Co. index. The yield on the 10-year bond was little changed today at 3.26 percent. The price of the 3.75 percent security due in June 2019 decreased 1 cent to C$104.18.

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