Nov. 29 (Bloomberg) -- Canada’s dollar strengthened versus the greenback as crude oil, the nation’s biggest export, climbed to a two-week high.
The loonie, as the currency is also known for the image of the aquatic bird on the C$1 coin, climbed to a two-month high versus the euro as an Irish bailout package failed to ease concern that Europe’s debt crisis will spread. The Canadian dollar outperformed the currencies of other commodity exporters such as Norway and Australia.
“The Canadian dollar strength is paired up with oil today,” said Darren Richardson, senior corporate dealer in Toronto at CanadianForex Ltd., an online foreign-exchange dealer. “There’s very good performance in oil.”
Canada’s currency gained 0.3 percent to C$1.0181 per U.S. dollar at 5 p.m. in Toronto, from C$1.0213 on Nov. 26. The loonie appreciated 1.2 percent to C$1.3363 per euro, from C$1.3523, after touching C$1.3355, the strongest level since Sept. 16. The Canadian dollar has appreciated 0.1 percent against the greenback in November, headed for what would be a third consecutive monthly gain, the longest winning streak since the three months ended May 2009.
January futures on crude oil rallied 2.5 percent to $85.89 a barrel. The price climbed as high as $85.90, the strongest intraday level since Nov. 12.
European governments sought to quell market turmoil menacing the euro, handing Ireland an 85 billion euro ($113 billion) aid package and diluting proposals to force bondholders to bear some cost of future bailouts. The cost of insuring debt from Spain and Portugal soared to record highs as concern mounted that the nations may need to be bailed out.
“We’ve got issues of financial instability not just in Ireland but in a number of other nations, and the Canadian financial system remains relatively robust,” said David Watt, senior currency strategist at Royal Bank of Canada’s RBC Capital Markets unit in Toronto.
The Aussie fell 0.2 percent to 96.31 U.S. cents against the greenback, while Norway’s krone traded at 6.1561. The euro dropped 0.9 percent to $1.3125.
“The attractiveness of Canadian assets has been driving very strong support of portfolio flows into the country,” said Sacha Tihanyi, a currency strategist at Bank of Nova Scotia in Toronto. “A lot of it is a continuation of concern and malaise over what’s going on in the euro zone.”
The Bank of Canada left its benchmark overnight rate unchanged at 1 percent last month after three successive increases starting in June. Policy makers are next scheduled to decide on borrowing costs Dec. 7.
Employment in Canada rose by a net 19,800 in November after a gain of 3,000 in the previous month, according to the median forecast of 24 economists in a Bloomberg News survey. The report from Statistics Canada is due Dec. 3.
“There could be some upside risk to the employment number this week,” said Blake Jespersen, director of foreign exchange at Bank of Montreal in Toronto. “If that happens, that would certainly put the Bank of Canada on the radar in terms of rate hikes.”
Canadian government bonds rose, with the yield on 10-year debt dropping three basis points, or 0.03 percentage point, to 3.08 percent. The price of the 3.5 percent security maturing in June 2020 increased 27 cents to C$103.45.
The current account deficit widened to a record in the third quarter, with payments sent abroad exceeding receipts from outside Canada by C$17.5 billion ($17.2 billion), Statistics Canada said today.
Separate figures showed the industrial product price index rose 0.5 percent in October, while the gauge of raw materials advanced 1.7 percent. Both gains were bigger than the median forecasts in Bloomberg News surveys.
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