Canadian Dollar Post Fifth Weekly Increase on Growth Optimism

The Canadian dollar gained for a fifth consecutive week against its U.S. counterpart on speculation growth will be sustained even after the economy unexpectedly shed jobs last month.

Canada’s currency posted its longest winning streak since October 2010 as comments this week by Bank of Canada Governor Mark Carney that economic growth may lead to a higher interest rates overshadowed today’s report showing employers eliminated 30,400 positions, all in part-time work, in July.

“You don’t want to read too much into one month of data,” David Mann, regional head of research for the Americas at Standard Chartered in New York, said in a telephone interview.

Canada’s dollar, nicknamed the loonie for the waterfowl on the one-dollar coin, was little changed at 99.11 cents per U.S. dollar at 5 p.m. in Toronto, after dropping as much as 0.6 percent after the jobs report. One Canadian dollar buys $1.009. The loonie rose 1 percent this week.

Futures traders increased bets that the Canadian dollar will gain against the greenback for a second consecutive week, according to figures from the Washington-based Commodity Futures Trading Commission released today.

The difference in the number of wagers by hedge funds and other large speculators on an advance in the Canadian dollar compared with those on a drop, known as net longs, was 19,122 contracts as of Aug. 7.

Job Losses

Government bonds were little changed this week, with the yield on the benchmark 10-year note rising about one basis point, or 0.01 percentage point, to 1.78 percent. The 2.75 percent securities maturing in June 2022 dropped 14 cents to C$108.68.

The jobless rate rose to 7.3 percent from 7.2 percent in June, Statistics Canada said today from Ottawa. Economists projected the unemployment rate would remain unchanged and employment would increase by 6,000, according to the median in a Bloomberg News survey of 25 economists.

Carney said in a British Broadcasting Corp. interview yesterday that the nation is in a “very different place” than economies such as the U.K.’s that are in crisis, and may require higher borrowing costs. The Bank of Canada will raise its 1 percent overnight target rate by a quarter-percentage point by the second quarter of 2013, according to the weighted forecast in a Bloomberg survey of 21 economists.

A report earlier saying China’s export growth collapsed and imports and new yuan loans trailed estimates in July added to speculation the Communist government will step up measures to support expansion.

Chinese Exports

“There’s a lot of faith in the central banks that they’re going to make it better by the way the market’s trading and risk is rallying,” Darcy Browne, managing director of capital markets trading at Canadian Imperial Bank of Commerce in Toronto, said in a telephone interview.

China’s exports increased 1 percent from a year earlier, the customs bureau said today in Beijing, after an 11.3 percent rise in June. Lower growth suggests demand for natural resources such as oil, Canada’s largest export, will decline. New local- currency lending was 540.1 billion yuan ($85 billion).

“All of a sudden you’ve seen numbers suggesting that maybe growth is still decelerating,” Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York, said in a telephone interview. “That would be a big disappointment for commodities, particular for oil, which is a big deal for the Canadian dollar.”

Crude oil futures for September delivery fell 1.21 percent to $92.23 a barrel after losing as much as 1.8 percent as China’s net crude imports fell in July to the lowest levels of the year, according to the country’s export data.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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