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Canada Dollar Reaches 1-Month High as Crude-Oil Bolsters Outlook

The Canadian dollar reached a one-month high as crude oil, the nation’s largest export, remained above $100 per barrel for the 18th day.

The currency rose against the majority of its most-traded peers before Canada may report on July 31 the economy grew 0.3 percent in May from 0.1 percent the month before, according to a Bloomberg survey of 18 economists. Last week, the country reported May retail sales grew at the fastest pace in three years.

“You could make a case for Canada to be a little bit stronger” to C$1.01 per U.S. dollar, said John Curran, a senior vice president at CanadianForex Ltd., an online foreign exchange dealer, by phone from Toronto.

The loonie, as the Canadian dollar is known, gained 0.1 percent to C$1.0265 per U.S. dollar at 5 p.m. in Toronto. It touched C$1.0253 per U.S. dollar, the strongest since June 19. One loonie buys 97.42 U.S. cents.

The currency has gained 2.5 percent this month versus the greenback while dropping 3.4 percent this year.

Canada’s 10-year government bonds fell, with yields rising five basis points, or 0.05 percentage point, to 2.49 percent. The 1.5 percent security maturing in June 2023 lost 37 cents to C$91.39. Yields on Canada’s 10-year bonds have increased six basis points this month.

Oil Market

Crude oil fell 0.2 percent to $104.52 per barrel and the discount for Canadian crude oil compared with U.S. benchmarks was at $20.75, down from $22 on July 23, the widest since May. Crude prices have jumped 8.3 percent this month, the biggest monthly gain since October 2011.

“We have three-digit crude and it’s holding above $100 even though the market gets the sense it’s getting a bit frothy up here, but that is supportive of the Canadian dollar,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada by phone from Toronto.

The monthly volume of foreign-exchange products in Canada, including spot transactions, outright forwards and foreign exchange swaps, increased 20.4 percent in April to $61.4 billion a day from $51 billion in October last year, the Canadian Foreign Exchange Committee said today in a statement.

Volume increased 29 percent for spot transactions, 42 percent for outright forwards and 12 percent for foreign exchange swaps, according to the statement.

The loonie has gained 0.7 percent in the past month against nine developed nation currencies tracked by the Bloomberg Correlation-Weighted Index. The U.S. dollar has declined the most at 2 percent.

“Oil has been very, very bid, it’s been on an uptrend and has basically been correcting, so I think that’s been a positive support for the Canadian dollar,” said Sebastien Galy, a senior foreign-exchange strategist at Societe General SA, by phone from New York.

To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net

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

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