Canada’s dollar rose against the majority of its most-traded peers as speculation faster economic growth will lead to higher interest rates tempered a decrease in worldwide equities. The currency fell earlier to the lowest level in almost a week against its U.S. counterpart as demand for the safest assets drove the U.S. dollar and the yen higher after an election in France worsened prospects for the euro-zone debt crisis. The loonie, as the currency is nicknamed, appreciated the most since March last week against the greenback after Bank of Canada policy makers suggested interest-rate increases this year were more likely. “The ongoing influence domestically has provided a positive spin on the dollar and the global backdrop remains challenged,� said Jack Spitz, managing director of foreign exchange at National Bank of Canada (NA) in Toronto, in a telephone interview. “As we get closer to parity, the market seems to have some trouble, but investors are buying the Canadian dollar on any weakness as it should outperform over the long term.� Canada’s currency rose 0.1 percent at 99.13 cents per U.S. dollar at 5:02p.m. in Toronto. It earlier touched 99.79 cents, the least since April 17. One Canadian dollar buys $1.0087. The Standard & Poor’s 500 Index declined as much as 1.4 percent while the MSCI World Index of equities also lost 1.4 percent. Price Patterns “We’re only back to where we closed Friday, but with stocks down 1 percent, it’s an impressive move,� Steve Butler, managing director in Toronto at Bank of Nova Scotia (BNS)’s Scotia Capital unit, wrote in an e-mail. “It feels like possibly there’s some M&A money coming into the market. We’ve seen a few consistent sellers of U.S. dollars today.� Investors have increased bets that the Bank of Canada will move this year to raise interest rates after Governor Mark Carney said on April 17 that removing stimulus “may become appropriate� in light of stronger growth and inflation. Traders have priced in almost a full quarter-percentage point of tightening by the central bank’s Dec. 4 meeting, according to Bloomberg calculations on overnight index swaps. That compares with about seven basis points the day before the bank’s announcement and less than five basis points April 11. “The Federal Reserve meeting is coming up, and the U.S. certainly won’t be more hawkish than Canada has been lately, which also tends support to the Canadian Dollar,� Spitz added. The U.S. central bank holds a two-day meeting that starts tomorrow. Carney’s Policy Carney, who has held the policy rate at 1 percent since September 2010, is weighing the risks to inflation posed by stronger growth and record household debt against an uneven global recovery and the unresolved euro-zone debt crisis. The bank’s statement last week said “in light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.� Canadian 10-year government bonds rose, with the yields dropping two basis points to 2.04 percent. The price of the 3.25 percent bonds maturing in June 2021 advanced 16 cents to C$110.02. Federal government bonds rose 0.1 percent this month, according to a Bank of America Merrill Lynch index. The Canadian currency briefly pared losses earlier after a report showed wholesale sales unexpectedly increased. Sales rose 1.6 percent to C$48.5 billion ($48.7 billion) in February, according to Ottawa-based Statistics Canada. Economists surveyed by Bloomberg predicted February sales would decline 0.2 percent, based on the median of 13 estimates. Canada’s currency is up 0.8 percent during the past week for the second-best performance among 10 currencies tracked by Bloomberg Correlation Weighted Indexes, spurred by speculation interest rates may be rising. The pound has gained 1.8 percent. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Chris Fournier in Halifax at cfournier3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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