BLBG: Canadian Dollar Reaches Strongest in a Week on U.S. Economic Recovery
Canada’s currency rose to its strongest level in more than a week versus the dollar after reports showed the economic recovery gaining momentum in the U.S., the nation’s largest trading partner.
The Canadian dollar gained for a fourth day as a report showed the nation’s gross domestic product was little changed in October. U.S. durable-goods orders rose the most in four months in November, after data yesterday showed a drop in jobless- benefit claims. Crude oil prices headed for the biggest weekly gain in almost two months and global equity prices rose.
“In terms of regional growth, the fact that North America is the less tarnished button is supportive,” said Stewart Hall, senior currency strategist at Royal Bank of Canada in Toronto. “There is some room that you see Canada be one of the better performing currencies in 2012 based on those broad themes.”
The loonie, as the currency is known for the image of the waterfowl on the dollar coin, rose 0.1 percent to C$1.0191 at 8:57 a.m. Toronto time, after earlier reaching C$1.0181, the strongest level since Dec. 12. One Canadian dollar buys 98.13 U.S. cents. The currency headed for its biggest weekly gain in three weeks.
Futures on the Standard & Poor’s 500 rose 0.4 percent and contracts for the S&P/TSX Composite Index gaining 0.4 percent. Crude oil futures in New York headed for the biggest gain since the week ended Oct. 28. Canada’s largest export rose 0.4 percent to $99.91 a barrel and headed for a 6.9 percent advance on the week.
Stocks Correlation
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.
Real GDP increased less than 0.1 percent on a seasonally adjusted basis, Statistics Canada said today in Ottawa. Economists forecast a 0.1 percent gain, based on the median estimate of a Bloomberg survey with 23 responses. Output had increased for four months before October, with a gain of 0.2 percent in September.
Bookings for equipment meant to last at least three years rose 3.8 percent in the U.S. after no change in prior month that was previously reported as a decline, data from the Commerce Department showed today in Washington. Consumer spending rose less than forecast in November as wages declined for the first time in three months, signaling the biggest part of the U.S. economy may struggle to pick up.
The loonie is down 1.7 percent this year for the worst performance in Bloomberg correlation weighted indexes. The yen has appreciated the most at 3.6 percent, followed by the U.S. dollar at 1 percent in the gauge of 10 developed-nation currencies.
To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
