Canada’s dollar touched the strongest level in more than a week versus its U.S. counterpart and gained for the week after government data showed Canadian and American payrolls climbed more than forecast. The Canadian currency, nicknamed the loonie, rose 1 percent this week as crude oil recovered to $84 a barrel and U.S. stocks rebounded from the worst quarterly loss since 2008. Six commodity-linked currencies, including the loonie, the Mexican peso and the South African rand, topped the weekly performance rankings among the greenback’s 16 most-traded peers. They pared gains after Fitch Ratings downgraded Spain and Italy. “There’s a risk relief rally in the market,” said Jose Wynne, head of North America foreign-exchange research at Barclays Plc’s Barclays Capital unit, by phone from New York. “The general tone of the market has been more constructive this week. We have to take the economic numbers as positive for the Canadian dollar,” he said, referring to today’s jobs reports. The Canadian currency rose to C$1.0395 per U.S. dollar at 5 p.m. in Toronto, from C$1.0503 on Sept. 30. It slipped 0.2 percent on the day after rising to the strongest level in more than a week. One Canadian dollar buys 96.20 U.S. cents. Canadian employment rose by 60,900 in September after a decline of 5,500 in August, Statistics Canada said today in Ottawa. The unemployment rate fell to 7.1 percent, the lowest since December 2008. Economists in Bloomberg News surveys projected a gain of 15,000 jobs and unemployment to remain at August’s reading of 7.3 percent. ‘Better Than Expected’ “The data out of Canada is better than expected, and the macro community will like that,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. “Fair value for Canada is stronger than current levels.” U.S. payrolls climbed by 103,000 workers last month, Labor Department data showed today in Washington. The median forecast in a Bloomberg survey called for an increase of 60,000. Revisions to previous reports added a total of 99,000 jobs to payrolls in July and August. The August total was revised to a gain of 57,000 from no change. “This report drives a wedge between what’s happening in Europe and what’s happening in the U.S.,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York. “You’re seeing job creation in the U.S. rather than businesses sitting and watching the crisis unfold in Europe.” Italy, Spain Ratings The jobs data pushed Canada’s dollar as much as 1.3 percent higher to C$1.0235, the strongest level since Sept. 28. It retreated as crude oil, the nation’s biggest export, fluctuated and stocks fell when Fitch cut the ratings of Spain and Italy. Italy had its foreign and local currency long-term issuer default ratings downgraded to A+ from AA-, while Spain had the same set of ratings cut to AA- from AA+. Fitch’s outlook for both was negative. Crude for November delivery traded at $82.87 a barrel in New York, up 0.3 percent, after rising 1.7 percent earlier to $84, the highest level since Sept. 28, and falling as much as 1.5 percent to $81.36. The Standard & Poor’s 500 Index fell 0.8 percent after rising 0.6 percent. It increased 2.1 percent for the week. Raw materials including crude oil account for about half of Canada’s export revenue. Canada’s government bonds dropped, pushing the yield on the two-year benchmark note up three basis points, or 0.03 percentage point, to 0.96 percent. It touched 1.03 percent, the highest level since Sept. 19. The 1.5 percent securities maturing in November 2013 declined 6 cents to C$101.09. Growth Forecast Growth in the world’s 10th largest economy is expected by analysts to decelerate this year and in 2012, and Bank of Canada Governor Mark Carney has said there’s less need to lift borrowing costs. The central bank kept its main interest rate unchanged for an eighth meeting last month amid Europe’s financial crisis and a slow U.S. rebound. Economic growth is forecast to slow to 2.2 percent this year and 2.1 percent in 2012, according to a Bloomberg survey of economists and analysts this month. That’s 0.2 percentage point below the August forecast for both years. The Bank of Canada estimates economic growth will slow to 2.6 percent next year from 2.8 percent this year. The nation’s gross domestic product rose 0.3 percent in July to C$1.26 trillion on a seasonally adjusted basis, Statistics Canada said Sept. 30, matching the median estimate in a Bloomberg survey with 23 responses. “We’ve now had a reasonable GDP print and a reasonably good Canadian employment number, so that is good news for people looking at the fundamental story for Canada,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto. Canada’s currency reached a three-year high of 94.07 cents in July before plunging along with other risk-related assets as investors, concerned that a potential Greek default may spark a run on European banks and send the global economy into another recession, took refuge in the U.S. dollar and the yen. To contact the reporters on this story: Chris Fournier in Halifax, Nova Scotia at cfournier3@bloomberg.net; Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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