Canada’s Currency Rises Versus Most Peers Amid Gains in Oil, U.S. Dollar
Wednesday, 15 February 2012 | 01:31
Canada’s dollar gained against all of its 16 most-traded counterparts as the currency of the nation’s biggest trade partner, the U.S., climbed and crude oil reached a three-week high.
The Canadian currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, touched the highest level since November against the yen. It fluctuated at about parity with the U.S. dollar, the world’s main reserve currency, which rose versus all of its peers except the loonie as investors sought safety. Crude oil, Canada’s biggest export, traded above $100 a barrel.
“The Canadian dollar is doing better than expected,” said Dean Popplewell, head analyst in Toronto at the online currency- trading firm Oanda Corp. “It still seems like it is a tier-two reserve currency, and its long association with the U.S. dollar is helping it to hold in relatively well.”
The Canadian currency was little changed at 99.91 cents per U.S. dollar at 5 p.m. in Toronto after advancing as much 0.2 percent earlier and weakening 0.3 percent. One Canadian dollar purchases $1.0010.
The loonie climbed as much as 1.3 percent to 78.60 yen, the strongest level since Nov. 1, before trading at 78.51 yen, up 1.2 percent. The currency gained 0.5 percent against the Australian dollar and the euro and appreciated 0.3 percent against New Zealand’s dollar.
“The market continues to like the Canadian dollar,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia’s Scotia Capital unit. “When the U.S. dollar is strengthening, Canada is doing well.”
Crude oil reached $101.84 a barrel in New York, the highest since Jan. 19, before trading at $100.98, up 0.2 percent. It fluctuated after analysts in a Bloomberg News survey forecast U.S. oil supplies climbed last week. The Energy Department reports the data tomorrow.
Canada’s currency climbed versus the yen after the Bank of Japan unexpectedly increased its stimulus program for the first time since October. The central bank added 10 trillion yen ($128 billion) to an asset-purchase program under a program known as quantitative easing. The move brought the program to a total of 30 trillion yen.
“The Canadian dollar is a marginal yet relevant outperformer,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “The biggest move has been in the yen on the back of the Japanese decision to add more quantitative easing.”
Canadian government bonds rose, pushing the yield on the benchmark 10-year note down five basis points, or 0.05 percentage point, to 2.02 percent. It dropped as much as seven basis points, the biggest intraday decrease this month, The price of the 3.25 percent securities due in June 2021 gained 45 cents to C$110.39.
Canada will auction C$3.5 billion ($3.5 billion) of five- year notes tomorrow, according to a statement on the Bank of Canada’s website. Yields on current five-year securities fell four basis points today to 1.38 percent.
Government bonds have lost 0.4 percent since Dec. 31, compared with a return of 9.6 percent for 2011, according to Bank of America Merrill Lynch’s Canadian Governments index.
The U.S. dollar rose versus most major currencies as slower-than-forecast growth in retail sales burnished its refuge appeal. Sales gained 0.4 percent in January, Commerce Department data showed, less than the 0.8 percent forecast in a Bloomberg survey of economists.
Stocks declined, with the Standard & Poor’s 500 Index down as much as 0.8 percent before paring losses in the last half- hour of trading on optimism Greece will commit to budget cuts.
The Canadian dollar slipped earlier against the euro as German investor confidence surged to a 10-month high in February. The ZEW Center for European Economic Research in Mannheim said its index rose to 5.4 this month from a minus 21.6 in January. The report was issued a day after Moody’s Investors Service, citing Europe’s debt crisis, cut the debt ratings of six European countries including Italy and Spain and said it may strip France and the U.K. of their top ratings.
Euro-area finance ministers canceled a meeting in Brussels scheduled for tomorrow and will hold a teleconference instead to prod Greece to do more to clinch a rescue package worth 130 billion euros ($170 billion). Luxembourg Prime Minister Jean- Claude Juncker, the group’s chairman, said he hadn’t received the “required political assurances” from Greek leaders that austerity measures will be implemented.
The loonie rose yesterday against the U.S. currency and fell the previous day. It hasn’t completed two consecutive days of gains or losses since Jan. 26.
“There’s information that is normally deemed market-moving facts or data, and the market itself is complacent,” National Bank’s Spitz said. “Much of it is a wait-and-see approach with Greece and Europe at large.”
The Canadian dollar has gained 1.7 percent over the past three months against nine developed-nation counterparts monitored by Bloomberg Correlation-Weighted Currency Indexes. The U.S. dollar fell 0.8 percent, while the euro dropped 4.1 percent.