Canada Dollar Reaches 5-Week High as China Growth Boosts Demand

The Canadian dollar reached a five- week high against its U.S. counterpart as Chinese data showed growth for the world’s biggest consumer of metals and energy and supported the currencies of commodity-exporting nations.

The loonie, as the currency is nicknamed, pared its advance as commodities prices erased gains and before employment data and central-bank policy statements later this week. China’s manufacturing expanded to an 11-month high, according to the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing April 1. Australia’s central bank kept its benchmark interest rate unchanged to match a half- century low in response to a recovery in household spending.

“Today’s move was in line with the better performance of commodity currencies,” Greg T. Moore, currency strategist at Toronto-Dominion Bank, said by phone from Toronto. “There is a little bit further room for extension before headwinds start to send it lower.”

The Canadian dollar gained 0.2 percent to C$1.0148 per U.S. dollar at 5:02 p.m. in Toronto, touching the strongest level since Feb. 20. One loonie buys 98.54 U.S. cents.

The loonie breached its 50-day moving average for the first time since Jan. 23.

Gold Falls

Gold fell 1.5 percent, pushing the Standard & Poor’s GSCI Index of 24 commodity prices down 0.2 percent. Crude oil, the nation’s largest export, dropped 0.2 percent to $96.88 a barrel.

“This market is trying to keep its powder relatively dry heading into the Bank of Japan and employment at the end of the week,” said Dean Popplewell, head analyst in Toronto at the online currency-trading firm Oanda Corp. “That’s why the Canadian dollar has been fairly volatile within a narrow range. Weakening commodity prices haven’t been helping the loonie either.”

Canadian employers may have added 6,500 to payrolls in March after a surge of 50,700 new workers in February, according to a survey of 24 economists by Bloomberg. Ottawa-based Statistics Canada is due to report the data April 5. The European Central Bank and the Bank of Japan are scheduled to release policy statements April 4.

Government bonds fell. The yield on the benchmark 10-year note rose three basis points, or 0.03 percentage point, to 1.87 percent, trimming 24 cents from the price of the 1.5 percent security due in June 2023 to C$96.58.

Sovereign Maturities

The weighted average maturity of Canadian sovereign bonds fell six months since June, the most in the Group of Seven, to 5.1 years, the shortest in the group, according to data compiled by Bloomberg. Maturities shrank last year as debt issued by Canada under its Insured Mortgage Protection Program, designed to backstop banks during the financial crisis, approaches the due date.

The U.S. maturity lengthened to 5.4 years from 5.3 years since June, while Japan’s expanded to 6.3 from 6.1 years, according to data compiled by Bloomberg. Among G-7 nations, Britain has the longest-maturing sovereign debt at 14.5 years.

Cypriot government officials will seek easier bailout terms in talks with representatives of the European Union and International Monetary Fund today, before a meeting of euro-area finance officials later this week.

The Canadian dollar is up 1.2 percent during the past month against the currencies of nine other developed nations tracked by the Bloomberg Correlation-Weighted Index. The U.S. dollar lost 0.1 percent.

To contact the reporter on this story: Cecile Gutscher in Toronto at cgutscher@bloomberg.net

To contact the editor responsible for this story: Robert Burgess at bburgess@bloomberg.net

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