BLBG:Canada’s Dollar Appreciates to Almost Two-Week High Amid Growth Optimism
Canada’s dollar appreciated to the highest in almost two weeks on speculation the economy of the U.S., the nation’s biggest trading partner, is recovering.
The Canadian currency gained for a third day against the U.S. dollar as stocks extended weekly gains after initial jobless claims and consumer confidence in the U.S. were better than forecast. Economists expect a report tomorrow will show Canada’s economy expanded for a fifth month.
“Stocks have had a great week; the Canadian dollar is following suit,” Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit, said in an e-mail message. “It looks like markets will stay risk-on going into year-end.”
Canada’s currency, nicknamed the loonie for the aquatic bird on the dollar coin, gained 0.6 percent to C$1.0203 per U.S. dollar at 5 p.m. in Toronto. It reached C$1.0202, the strongest level in since Dec. 12. It appreciated 0.8 percent to 76.6 yen, and was up 0.6 percent to C$1.3322 versus the euro. One Canadian dollar buys 98.01 U.S. cents.
The Standard & Poor’s 500 Index was up 0.8 percent and has added 3.1 percent for the week. Canada’s S&P/TSX Composite Index rose 1.2 percent has appreciated 3.2 percent this week. Crude oil, Canada’s biggest export, rose 0.8 percent to $99.48 a barrel.
Movements in the Canadian dollar have been increasingly tied to equities. The one-month correlation coefficient between the gauge of U.S. equities and the Canadian dollar reached 0.9348 on Nov. 14, the strongest relationship since Bloomberg data began in 1992, versus an average since then of 0.2426. A reading of 1 indicates the measures move in lockstep. The reading was 0.8854 today.
Canada’s government bonds have returned 9.6 percent this year, according to a Bank of America Merrill Lynch index. The 10-year note’s yield was little changed at 1.95 percent.
‘Corporate Repatriation’
The loonie is rising partly because of “corporate repatriation of foreign revenue back to the Canadian dollar for year-end,” C.J. Gavsie, managing director for currency trading in Toronto at Bank of Montreal, said in an e-mail message. The currency will remain stronger as long as the euro stays above $1.30, he said.
The loonie gaining on optimism about a U.S. economic recovery is a “fair statement,” Gavsie said, “but everyone is still on high alert with European debt news.”
A report showed the number of applications for unemployment benefits in the U.S. dropped last week to the lowest since April 2008, a sign that the labor market in the world’s biggest economy is strengthening heading into 2012.
Revised Commerce Department figures showed gross domestic product climbed at a 1.8 percent annual rate from July through September, down from the 2 percent estimated last month.
Consumer Sentiment
The Thomson Reuters/University of Michigan final index of consumer sentiment increased to 69.9 in December from the previous estimate of 67.7. The median estimate in a Bloomberg News survey called for 68.
The Conference Board’s index of leading economic indicators may signal continued expansion in the world’s largest economy in the first half of 2012. The gauge rose 0.3 percent in November after a 0.9 percent gain the prior month, according to a Bloomberg News survey of economists.
The loonie is among the top three performers in Bloomberg correlation weighted indexes over the past month. It is down 1.9 percent this year for the worst performance in the gauge of 10 developed-nation currencies. The yen has appreciated the most at 3.5 percent, followed by the U.S. dollar at 1 percent.
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
