BLBG: Canada’s Dollar Strengthens, Trades Near Highest Since October
Canada’s dollar rose, trading near the highest level in almost eight months as signs a recovery in the global economy is under way burnished the appeal of currencies linked to growth.
“There are a number of reasons why the Canadian dollar should continue to post gains, primarily on the back of the global growth story and commodities,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “The market is looking for the opportunity to sell the U.S. dollar.”
The Canadian currency strengthened as much as 1.3 percent to C$1.0792 per U.S. dollar before trading at C$1.0816 at 10:54 a.m. in Toronto, compared with C$1.0935 yesterday. One Canadian dollar buys 92.46 U.S. cents. The loonie, as Canada’s dollar is known, touched C$1.0785 yesterday, the strongest since Oct. 3.
The number of Americans signing contracts to buy previously owned homes climbed 6.7 percent in April, the fourth increase in five months and the biggest in seven years, as lower prices attracted buyers. A report yesterday showed manufacturing in the U.S. shrank in May less than forecast.
A rally in stocks and commodity prices pushed the loonie to the biggest monthly gain in May for almost six decades. The U.S. dollar fell today against 11 of the 16 most-traded currencies tracked by Bloomberg.
“The U.S. dollar trend is still intact,” said Jonathan Gencher, Toronto-based director of currency sales at BMO Capital Markets. “Any bounce in the U.S. dollar is seeing selling interest.”
Stocks Gain
The MSCI World, a benchmark index for 23 developed markets, rose 0.5 percent, and the Standard & Poor’s 500 Index added 0.2 percent. Both gained for a fourth day.
The 30-day correlation coefficient between the stock gauges and the loonie was 0.60 and 0.63, respectively, according to Bloomberg data. A reading of 1 would indicate they move in lockstep. The correlation with crude oil was 0.55, the data showed, up from 0.51 at the start of the year.
Crude oil for July delivery rose yesterday as much as 3.6 percent to $68.68 a barrel on the New York Mercantile Exchange, the highest since Nov. 5. The contract traded down 0.4 percent today to $68.32. Raw materials account for more than half of Canada’s export revenue.
