BLBG:Canada’s Dollar Rises as Stocks, Oil Gain Before Bank of Canada Decision
Canada’s dollar advanced toward a two-month high versus the greenback as global stocks and crude oil rose before the Bank of Canada’s decision on interest rates.
The currency climbed against most of its major counterparts while it trailed the commodity-linked New Zealand and Australian dollars. All 26 economists in a Bloomberg News survey predict Bank of Canada Governor Mark Carney will leave the target for overnight loans between commercial banks at 1 percent. Policy makers may still reiterate that interest rates will eventually rise after inflation reached the fastest since 2003 in May.
“Markets are more willing to add risk to their portfolios today,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “There is some anticipation for the Bank of Canada. We’ve had unexpectedly high CPI prints in Canada, as well as reasonably solid GDP and employment numbers,” she said, referring to the consumer price index and gross domestic product. “That leads to a fundamental backdrop that will likely be noted by Carney.”
The Canadian currency appreciated 0.5 percent to 95.48 cents per U.S. dollar at 7:53 a.m. in Toronto, from 95.97 cents yesterday. It reached 95.21 cents on July 15, the strongest level since May 11. One Canadian dollar buys $1.0473.
The loonie, as the currency is sometimes known, appreciated the most versus the Swiss franc among major currencies as investors squared positions before a July 21 meeting of European Union leaders.
‘Nervous’ Markets
“Markets remain nervous ahead of the Thursday emergency meeting,” Sara Yates, a foreign-exchange strategist at Barclays Plc, said by phone from London. “What we’ve run into perhaps is some profit taking in Swiss franc positions. There’s uncertainty about what the outcome of that meeting will be, and the market is nervous ahead of that.”
Carney’s decision and accompanying statement are due at 9 a.m. Ottawa time on the bank’s website. The bank will release its monetary policy report at 10:30 a.m. tomorrow, with a press conference by Carney 45 minutes later.
The central bank’s target rate for overnight loans between commercial banks will end 2011 at 1.50 percent, according to the median forecast in a Bloomberg News survey of economists.
To contact the reporter on this story: Chris Fournier in Halifax at cfournier3@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
