Canada’s dollar gained, touching the strongest level in a week, as stocks ended the day higher and crude oil, the nation’s biggest export, rose. The Canadian currency has fallen 2.6 percent in August, poised for the biggest monthly drop in a year on bets a stalling global recovery will crimp demand for raw materials, which account for about half the nation’s export revenue. Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty will testify before parliament Aug. 19, the same day the government issues data that economists predict will show inflation slowed last month. “Equities are in lockstep with the Canadian dollar,” Michael Leavitt, a Montreal-based institutional-derivatives broker at MF Global Canada Co., said via e-mail. “Carney speaking this Friday along with CPI should put the Canadian dollar into another volatile mood,” he said, referring to the consumer price index, a measure of inflation. The Canadian currency increased 0.2 percent to 98.07 cents per U.S. dollar at 5 p.m. in Toronto, after earlier touching 97.75, the highest since Aug. 10. It ended yesterday at 98.24 cents. The loonie, as the currency is nicknamed, dropped to a six-month low on Aug. 9, when the Federal Reserve said the U.S. recovery is “considerably slower” than anticipated. One Canadian dollar buys $1.0201. The MSCI World Index of stocks rose 0.3 percent, and the Standard & Poor’s 500 Index ended the day 0.1 percent higher after dropping earlier as much as 0.7 percent. The loonie’s one- month correlation coefficient with the benchmark gauge for U.S. stocks reached 0.89 today, matching the reading on Aug. 11, which is the highest since July 2010, Bloomberg data show. A reading of 1 indicates the measures move in lockstep. International Investors Foreign investors sold a net C$3.46 billion ($3.53 billion) of Canadian securities, the first outflow in 15 months, as maturities topped new purchases, Statistics Canada said today in Ottawa. About C$11.8 billion of Canadian bonds matured in June while foreigners bought C$10.3 billion of debt to replace them, the data show. Economists in a Bloomberg survey forecast net purchases of C$10 billion, the median of four responses. The nation’s benchmark 10-year bonds rose, driving the yield down seven basis points, or 0.07 percentage point, to 2.4 percent. The yield touched 2.29 percent on Aug. 11, the lowest in Bloomberg records dating to 1989. The price of the 3.25 percent bonds maturing in June 2021 advanced 60 cents on the dollar to C$107.50. Canada auctioned C$3.5 billion of two-year debt today, drawing an average yield of 1.03 percent. The government received bids of C$8.75 billion for the 1.5 percent securities maturing in November 2013, according to a statement on the Bank of Canada’s website. Parliamentary Committee Flaherty and Carney will testify at the end of the week at a parliamentary committee on the sovereign-debt crisis in Europe and the U.S. budget deficit. The same day, Statistics Canada will release its consumer price index, which economists in a Bloomberg News survey predict will show inflation slowed to a 2.8 percent annualized pace in July, from 3.1 percent in June, according to median estimates. “Any reaction to CPI on Friday is going to be downplayed because Carney is going to be speaking to the parliamentary committee, along with Flaherty,” David Watt, senior currency strategist at Royal Bank of Canada’s RBC Capital Markets, said by phone from Toronto. “They’re likely to express a more cautious view than the bank expressed in mid-July.” The Bank of Canada kept its main interest rate unchanged at 1 percent on July 19 and said borrowing costs will increase as the economy recovers, dropping the word “eventually” to describe the timing of rate rises, a move perceived by traders as a hawkish signal. Policy makers next meet to set rates on Sept. 7. Crude oil futures rose 0.9 percent to $87.44 a barrel in New York. The loonie’s one-month correlation with crude was 0.45 today, down from 0.82 on Aug. 8. Oil is Canada’s largest export. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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