BLBG: Canadian Currency Appreciates as GDP Rises Most in a Decade
By Chris Fournier
May 31 (Bloomberg) -- Canada’s dollar rose after a report showed the economy expanded at the fastest pace in a decade in the first quarter, increasing pressure on the country’s central bank to raise interest rates tomorrow.
The currency, known as the loonie, rose to its strongest level in more than a week after Statistics Canada said gross domestic product rose 6.1 percent in the January-March period, more than forecast. Canada’s dollar has depreciated 2.4 percent this month versus the greenback along with other higher-yielding currencies and the euro amid concern the sovereign-debt crisis in Europe may hamper the global economic recovery.
“There’s just a little bounce for the euro and the Canadian dollar is going along for the ride,” Firas Askari, head currency trader at Bank of Montreal said by e-mail from Toronto. “Liquidity is going to be very light today. All eyes will be on Carney tomorrow,” he said, referring to Bank of Canada Governor Mark Carney.
The Canadian currency advanced 1 percent to C$1.0439 per U.S. dollar, the strongest level since May 20, at 8:52 a.m. in Toronto, compared with C$1.0546 on May 28. One Canadian dollar buys 95.78 U.S. cents.
Twenty-five of 27 economists in a Bloomberg survey say Carney will tomorrow increase the record low target lending rate by a quarter-percentage point to 0.5 percent, the first Group of Seven central banker to do so since last year’s global recession.
Crude for July delivery gained as much as 71 cents, or 1 percent, to $74.68 a barrel in electronic trading on the New York Mercantile Exchange. Crude is Canada’s largest export. The loonie tends to follow movements in crude oil and stocks.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
