Canadian Dollar Advances on Demand for Refuge as Egypt's Mubarak Resigns
Canada’s dollar rose against all of its major counterparts as political unrest that led to the resignation of Egyptian President Hosni Mubarak spurred appetite for the safety of North American assets.
The loonie advanced the most versus the euro in almost a month as Mubarak handed power to the military, bowing to the demands of protesters demanding an end to his 30-year rule. Canada’s dollar gained versus the greenback as the nation unexpectedly posted its first trade surplus in 10 months and the U.S. trade deficit widened.
“After the Egyptian announcement, the market quickly realized that there is a lot of uncertainty about who is going to take control, how these elections are going to progress and what the next government is going to look like,” said Blake Jespersen, director of institutional foreign-exchange sales at Bank of Montreal in Toronto.
The Canadian currency appreciated as much as 1.3 percent to C$1.3361 versus the euro before trading at C$1.3380 at 5 p.m. in Toronto, compared with C$1.3537 yesterday. It was the biggest gain on an intraday basis since Jan. 17. The loonie climbed 0.8 percent to 98.74 cents per U.S. dollar, from 99.53 cents, erasing its weekly drop.
The C$3 billion ($3 billion) trade surplus in December followed a revised November deficit of C$115 million as energy and metals powered the biggest jump in exports in almost three decades, Statistics Canada said today in Ottawa. The median forecast of 23 economists in a Bloomberg News survey was for a deficit of C$300 million.
‘Healthy Pace’
“The domestic demand in Canada has been expanding at a healthy pace, and the slowdown we saw in the economy mainly had to do with the weakness in the export sector,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “That export sector is now benefiting from growth in the U.S.”
America’s trade deficit increased in December as the cost of imported oil climbed to the highest level in two years. The gap grew 5.9 percent to $40.6 billion, in line with the $40.5 billion median forecast in a Bloomberg News survey of 77 economists, the Commerce Department reported in Washington.
Canada’s dollar has risen 0.3 percent versus the euro this week as Mubarak resigned after Egyptians streamed out of Friday prayers vowing to topple him. Mubarak defied calls yesterday for him to leave for the second time this month.
“In the safe-haven search, the market feels pretty confident about Canada,” said Steve Butler, director of foreign-exchange trading at Bank of Nova Scotia’s Scotia Capital unit in Toronto.
Government bonds were little changed, with the yield on the 10-year benchmark at 3.47 percent. The price of the 3.5 percent security maturing in June 2020 fell 1 cents to C$100.25.
Canadian stocks dropped, with the Standard & Poor’s/TSX Composite Index down 0.5 percent. Futures on crude oil dropped 1.6 percent to $85.31 a barrel in New York.
To contact the reporters for this story: Allison Bennett in New York at abennett23@bloomberg.net; Catarina Saraiva in New York at asaraiva5@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
Rate this Page