Canada’s dollar strengthened to the highest level against its U.S. counterpart since November 2007 as commodities including crude oil, the nation’s biggest export, surged amid optimism global economic growth is accelerating.
The currency gained for the third straight week as oil exceeded $112 a barrel on concern Libyan output won’t rebound when fighting ends in that divided nation. Gold surged to a record. The Bank of Canada is expected to keep its target interest rate at 1 percent when policy makers meet next week.
“When commodity prices are up, oil prices are up and equity markets rally, the risk-on benefits the Canadian dollar,” said Rahim Madhavji, president at Knightsbridge Foreign Exchange Inc. in Toronto.
The dollar, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, appreciated 0.8 percent to 95.54 cents per U.S. dollar yesterday in Toronto, from 96.32 cents on April 1. It touched 95.27 cents yesterday, the strongest level since Nov. 15, 2007. One Canadian dollar buys $1.0467.
The loonie has strengthened 9.3 percent since June, and is approaching the strongest levels since it was allowed to float in 1950. The currency touched 90.58 cents on Nov. 7, 2007, as the collapse of the U.S. subprime-mortgage market disrupted financial markets and weakened the U.S. dollar.
Government bonds fell for a third week. The yield on the benchmark 10-year security climbed 8 basis points, or 0.08 percentage point, to 3.44 percent. Two-year note yields rose 7 basis points to 1.90 percent, also the third consecutive weekly increase.
Asset Prices
Crude oil for May delivery increased 4.5 percent last week to $112.79 a barrel in New York, the highest level since September 2008. The Reuters/Jefferies CRB Index of raw materials climbed 2.2 percent in its third consecutive weekly gain, and gold advanced 3.2 percent. Raw materials including oil and gold account for about half of Canada’s export revenue.
The Standard & Poor’s/TSX Composite Index has climbed 5.7 percent this year as the Canadian economy expands and the U.S. Federal Reserve encourages investors to seek higher yielding assets elsewhere by keeping borrowing rates at a record low range of zero to 0.25 percent.
“Equity markets are up, the U.S. dollar is weak and commodities are booming, which is a formula for Canadian dollar strength,” said Steven Englander, head of Group of 10 currency strategy at Citigroup Inc. in New York. “Canada’s data numbers are the second story.”
Canada unexpectedly lost jobs in March for the first time in six months as a record drop in part-time work outstripped the biggest gain in full-time positions in a year. Employment fell by 1,500, following gains of 15,100 and 69,200 in the prior two months, Statistics Canada said yesterday.
Interest Rate Expectations
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six of its major trading partners including the Canadian dollar, fell to as low as 74.855 yesterday, the least since December 2009.
The Bank of Canada, which led the Group of Seven nations with three interest-rate increases last year, is expected to keep its benchmark at 1 percent, according to the weighted average forecast in a Bloomberg News survey of 25 economists.
The central bank, which meets April 12, has kept its benchmark at 1 percent since September. Policy makers reiterated on March 1 that “considerable slack” remains in the economy. Exporters face “considerable challenges” from a currency trading at a more than a three-year high, they said.
‘Interest to Diversify’
Canada’s trade ties to the U.S. have fallen to the lowest since at least 1986, extending a slide between the world’s largest commercial partners, Statistics Canada said.
About 62.5 percent of Canada’s foreign merchandise trade was with the U.S. in 2010, down from 76.3 percent in 2001, the Ottawa-based agency said in an annual review April 7. Canada’s share of trade with China tripled to 3.3 percent from 1.1 percent during that time, while trade with the U.K. rose to 4.1 percent from 1.3 percent.
“Canada is a large commodity producer and it’s in their interest to diversify,” said Kathy Lien, director of currency research with online currency trader GFT Forex in New York. “Overall, all signs point to that Canada isn’t as reliant on the U.S. these days.”
Source: http://www.bloomberg.com
The currency gained for the third straight week as oil exceeded $112 a barrel on concern Libyan output won’t rebound when fighting ends in that divided nation. Gold surged to a record. The Bank of Canada is expected to keep its target interest rate at 1 percent when policy makers meet next week.
“When commodity prices are up, oil prices are up and equity markets rally, the risk-on benefits the Canadian dollar,” said Rahim Madhavji, president at Knightsbridge Foreign Exchange Inc. in Toronto.
The dollar, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, appreciated 0.8 percent to 95.54 cents per U.S. dollar yesterday in Toronto, from 96.32 cents on April 1. It touched 95.27 cents yesterday, the strongest level since Nov. 15, 2007. One Canadian dollar buys $1.0467.
The loonie has strengthened 9.3 percent since June, and is approaching the strongest levels since it was allowed to float in 1950. The currency touched 90.58 cents on Nov. 7, 2007, as the collapse of the U.S. subprime-mortgage market disrupted financial markets and weakened the U.S. dollar.
Government bonds fell for a third week. The yield on the benchmark 10-year security climbed 8 basis points, or 0.08 percentage point, to 3.44 percent. Two-year note yields rose 7 basis points to 1.90 percent, also the third consecutive weekly increase.
Asset Prices
Crude oil for May delivery increased 4.5 percent last week to $112.79 a barrel in New York, the highest level since September 2008. The Reuters/Jefferies CRB Index of raw materials climbed 2.2 percent in its third consecutive weekly gain, and gold advanced 3.2 percent. Raw materials including oil and gold account for about half of Canada’s export revenue.
The Standard & Poor’s/TSX Composite Index has climbed 5.7 percent this year as the Canadian economy expands and the U.S. Federal Reserve encourages investors to seek higher yielding assets elsewhere by keeping borrowing rates at a record low range of zero to 0.25 percent.
“Equity markets are up, the U.S. dollar is weak and commodities are booming, which is a formula for Canadian dollar strength,” said Steven Englander, head of Group of 10 currency strategy at Citigroup Inc. in New York. “Canada’s data numbers are the second story.”
Canada unexpectedly lost jobs in March for the first time in six months as a record drop in part-time work outstripped the biggest gain in full-time positions in a year. Employment fell by 1,500, following gains of 15,100 and 69,200 in the prior two months, Statistics Canada said yesterday.
Interest Rate Expectations
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against six of its major trading partners including the Canadian dollar, fell to as low as 74.855 yesterday, the least since December 2009.
The Bank of Canada, which led the Group of Seven nations with three interest-rate increases last year, is expected to keep its benchmark at 1 percent, according to the weighted average forecast in a Bloomberg News survey of 25 economists.
The central bank, which meets April 12, has kept its benchmark at 1 percent since September. Policy makers reiterated on March 1 that “considerable slack” remains in the economy. Exporters face “considerable challenges” from a currency trading at a more than a three-year high, they said.
‘Interest to Diversify’
Canada’s trade ties to the U.S. have fallen to the lowest since at least 1986, extending a slide between the world’s largest commercial partners, Statistics Canada said.
About 62.5 percent of Canada’s foreign merchandise trade was with the U.S. in 2010, down from 76.3 percent in 2001, the Ottawa-based agency said in an annual review April 7. Canada’s share of trade with China tripled to 3.3 percent from 1.1 percent during that time, while trade with the U.K. rose to 4.1 percent from 1.3 percent.
“Canada is a large commodity producer and it’s in their interest to diversify,” said Kathy Lien, director of currency research with online currency trader GFT Forex in New York. “Overall, all signs point to that Canada isn’t as reliant on the U.S. these days.”
Source: http://www.bloomberg.com
No comments:
Post a Comment