Canada’s dollar strengthened to a seven-month high against its U.S, counterpart on speculation equities gains signal the global economic growth outlook is improving, bolstering prospects for the nation’s exports. The Canadian dollar rallied against most of its major peers and is headed for a 1.5 percent gain this month versus the greenback, trailing only the yen. It remained higher after the Federal Reserve refrained from additional stimulus measures including further asset purchases as policy makers said they expect economic growth to gradually accelerate. “Risk assets will fade a bit if there is little or no hint of additional easing measures,� said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit, via e-mail. “The statement was not greatly changed from last time around and gave no indication of any change in FOMC thinking.� Canada’s currency, nicknamed the loonie, touched 98.23 cents per U.S. dollar, the strongest since Sept. 19, before trading 0.4 percent higher at 98.33 cents at 5 p.m. in Toronto. One Canadian dollar buys $1.0170. The Standard & Poor’s 500 Index rose 1.4 percent. The MSCI World Index advanced 1.1 percent. Currency Forecast The loonie will strengthen to 98 cents per U.S. dollar by year end, according to the median of 40 forecasts compiled by Bloomberg. Canada has the second-fastest gross domestic product growth after Germany among Group of Seven nations and may be the first to raise interest rates later this year, swaps trading shows. “The Canadian dollar, which is already being coveted on a relative-value basis, is attracting more bids,� said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto, in a telephone interview. “We like Canada, both against the U.S. dollar and selectively on the crosses.� Cross-trades are currency transactions that don’t involve the U.S. dollar. Fed policy makers led by Chairman Ben S. Bernanke are holding off on additional steps to boost the economy amid signs the more than two-year expansion is gaining strength. Still, the jobless rate isn’t declining fast enough to satisfy central bankers, who repeated their view today that U.S. borrowing costs are likely to remain “exceptionally low� at least through late 2014. Bonds Fall Canadian 10-year government bonds fell, pushing the yield to 2.11 percent, up three basis points. The 3.25 percent securities maturing in June 2021 fell 27 cents to C$109.49. Federal government bonds have lost 0.9 percent this year, according to Bank of America Merrill Lynch’s Canadian Governments index. Canada sold C$2.9 billion ($3 billion) of three-year bonds at an average yield of 1.598 percent. The debt matures in August 2015. Ontario Premier Dalton McGuinty’s agreement to secure support of the opposition New Democratic Party for his budget boosted the province’s bonds on expectations higher revenue will help narrow its deficit. McGuinty won approval from lawmakers on a key budget vote yesterday after agreeing to a 2 percent surtax on people earning more than C$500,000 a year, meeting a key demand of NDP Leader Andrea Horwath. To contact the reporter on this story: 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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