BLBG:Canadian Dollar Gains for 6th Day in Longest Winning Streak Since January
The Canadian dollar advanced for a sixth straight day in the longest winning streak since January before a report tomorrow forecast by economists to show employers resumed adding jobs.
Canada’s currency rallied yesterday the most since August versus the U.S. dollar as the Federal Reserve and five central banks including the Bank of Canada acted to make it cheaper for lenders to borrow in dollars to contain European sovereign-debt turmoil.
“People are positioning themselves long Canada ahead of the Canadian payroll numbers tomorrow, which are expected to be decent,” Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto, said in a telephone interview. A long position is a bet an asset will rise. “We may be seeing a little bit of fast money in that respect. Longer- term, the global backdrop is still challenging, so this is just intraday noise.”
The loonie, as the currency is also known for the image of the aquatic bird on the C$1 coin, appreciated 0.4 percent to C$1.0139 per U.S. dollar at 5 p.m. Toronto time. One Canadian dollar buys 98.63 U.S. cents. The loonie gained yesterday to C$1.0124, the strongest level since Nov. 14.
Yields on 10-year Government of Canada bonds fell two basis points, or 0.02 percentage point, to 2.13 percent. The price of the 3.25 percent securities maturing in June 2021 increased 12 cents to C$109.52.
Employment Report
Canadian employers probably added 20,000 jobs in November after eliminating 54,000 positions in the previous month, according to the median forecast of 23 economists in a Bloomberg News survey before tomorrow’s report from Statistics Canada. The unemployment rate may have held at 7.3 percent.
The Canadian dollar is headed for a 3.2 percent weekly gain versus the greenback on speculation yesterday’s move by central banks will help contain European sovereign-debt turmoil and encourage demand for higher-yielding assets.
European leaders are due to meet Dec. 9 after a series of stop-gap accords failed to protect Italy and Spain from surging bond yields. European Central Bank President Mario Draghi said today that the bank’s bond-buying program was “limited” and that euro-region governments unifying their fiscal policies would be a more effective way to end the crisis.
The loonie may struggle to sustain recent gains until European Union leaders take concrete measures to stem the region’s crisis, according to Blake Jespersen, director of foreign exchange at Bank of Montreal in Toronto.
‘Headline Risk’
“There’s too much headline risk out of Europe over the next several days to really continue this move,” Jespersen said in a telephone interview. “A lot of accounts have told us they are on hold for a few days until there is more clarity out of Europe. We’ve seen several rallies in the past few months stall and go back the other way.”
Canada’s dollar got a boost earlier today as the Tempe, Arizona-based Institute for Supply Management’s U.S. factory index increased to 52.7 last month from 50.8 in October. Readings above 50 indicate expansion, and economists surveyed by Bloomberg News projected a gain to 51.8. America is Canada’s biggest trading partner.
“Potentially this is just a short-term distraction because there are bigger issues at play in Europe,” Greg Moore, currency strategist at Toronto-Dominion Bank’s TD Securities, said in a telephone interview from Toronto.
The loonie has gained 1.7 percent in the past month, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-nation currencies. The greenback has gained 1.8 percent, and the yen has advanced 2.32 percent.
To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
