Canada’s dollar rose the most in more than a year versus its U.S. counterpart after the Federal Reserve pledged to keep its benchmark interest rate at a record low at least through mid-2013, and traders speculated recent losses in the currency were unsustainable. The Canadian currency rose for the first time in eight days after reaching the weakest level in six months, as U.S. stocks rallied and crude oil, Canada’s largest export, pared an earlier loss to trade above $80 a barrel. The loonie, as the currency is called, depreciated through parity with the U.S. dollar today for the first time since February. “The Canadian dollar has been beaten up along with other pro-risk currencies for the better part of a week now,” said Shane Enright, executive director in Toronto at Canadian Imperial Bank of Commerce’s CIBC World Markets. “A relief rally was overdue.” Canada’s dollar appreciated as much as 1.8 percent, the biggest intraday jump since May 2010, to 97.70 cents per U.S. dollar before trading at 97.72 cents at 5 p.m. in Toronto. It closed yesterday at 99.45 cents. The currency declined earlier today to C$1.0010, the weakest level since Feb. 1. One Canadian dollar buys $1.0221. The loonie climbed as U.S. stocks rallied the most in more than two years as the Fed said it was prepared to use a range of tools to bolster the economy following yesterday’s rout in equities. The Standard & Poor’s 500 Index gained as much as 2.9 percent in midday trading, then dropped 1.6 percent following the Fed’s statement before resuming its advance. It was up 4.7 percent at closing, the most since March 2009, Financial stocks, which paced a slide that erased $1 trillion in market value yesterday, soared more than 8 percent. Parity With Greenback The loonie slid earlier today to parity with its American counterpart for the first time since February after S&P’s credit-rating downgrade of the U.S. on Aug. 5 sparked the biggest sell-off in risk assets since the credit crunch three years ago. “There’s still a story in that there’s value in Canadian- based assets,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia’s Scotia Capital, said by phone from Toronto. “Investors will be looking to diversify away from the U.S.- and European-based assets. That should build fairly well for the Canadian dollar.” Futures on crude oil, Canada’s biggest export, rose 0.6 percent to $81.83 a barrel in New York after falling to $75.71 a barrel, the lowest level since September 2010. Housing Starts Canadian housing starts climbed in July at the fastest pace in 15 months, adding to evidence the country’s real estate market remains buoyant as borrowing costs stay low. Work began on 205,100 units on a seasonally adjusted annual basis, the fastest pace since April 2010, after a revised reading of 196,600 units in June, Canada Mortgage and Housing Corp. said today in Ottawa. Economists forecast a reading of 194,500, according to the median forecast of 16 economists in a Bloomberg News survey. Government bonds fell after yesterday’s rally, pushing the yield on two-year debt up four basis points, or 0.04 percentage point, to 0.85 percent. The price of the 2 percent security maturing in August 2013 fell 9 cents on the dollar to C$102.25. The yield ended yesterday at 0.81 percent, the lowest level in at least 22 years. Canada’s dollar has declined 5.1 percent this year, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-market currencies. The greenback has fallen 7.1 percent. To contact the reporter on this story: Chris Fournier in Halifax at cfournier3@bloomberg.net To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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