March 24 (Bloomberg) -- Canada’s dollar strengthened against its U.S. counterpart for the first time in three days as crude oil, the nation’s biggest export, traded at almost the highest level in 29 months.
The Canadian currency rose versus most major peers as speculation Portugal will get a bailout bolstered confidence in the economic outlook, fueling demand for higher-yielding assets. Commodities and stocks rose. Elections became more likely in Canada after Michael Ignatieff, an opposition leader, said yesterday his Liberal party will introduce a non-confidence motion in the government tomorrow.
“Commodities are up,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “The political story in Canada has no traction in favor of rising crude-oil prices and risk appetite.”
Canada’s currency, also known as the loonie for the image of the aquatic bird on the C$1 coin, gained 0.7 percent to 97.52 cents per U.S. dollar at 5 p.m. in Toronto, from 98.16 cents yesterday. It reached 97.32 cents, the strongest level since March 14. One Canadian dollar buys $1.0254.
The loonie trimmed gains as commodities slipped from their highs of the day. Crude oil for May delivery rose as much as 0.9 percent to $106.69 per barrel in New York before trading at $105.42. It touched $106.95 a barrel on March 7, the highest since September 2008, and has gained 8.8 percent this month.
Gold futures for April delivery reached a record $1,448.60 an ounce in New York before sliding to $1,429.80. The Reuters/Jefferies CRB Index of raw materials increased 0.4 percent. Raw materials including gold account for about half of Canada’s export revenue.
The Standard & Poor’s 500 Index advanced 0.9 percent and the MSCI World Index of equities gained 1 percent. The MSCI gauge was up for a sixth day, its longest rally since September.
“The market has the feel that risk is on,” said C.J. Gavsie, managing director for foreign exchange trading at Bank of Montreal’s BMO Capital Markets unit in Toronto.
The loonie appreciated as much as 0.4 percent versus the euro to C$1.3777 as Portugal moved closer to needing external aid after Prime Minister Jose Socrates’s offer to resign left his government in limbo just before a European Union summit on the region’s sovereign-debt crisis. The currency later traded little changed at C$1.3828 per euro.
Drawing a Line
The meeting is focused on measures aimed at drawing a line under the debt crisis. European Central Bank President Jean-Claude Trichet said he expects governments to agree on the financing of the future euro rescue fund after Germany called for it to be renegotiated. He spoke to reporters after attending the first day of the summit, which ends tomorrow.
A rescue of Portugal may total as much as 70 billion euros ($99 billion), according to two European officials with direct knowledge of the matter.
The Canadian dollar dropped 0.4 percent over the past month in a basket of 10 developed-nation currencies tracked by the Bloomberg Correlation-Weighted Currency Indexes. The euro gained 1.8 percent, while the greenback lost 1.2 percent.
Canada’s currency appreciated 1.4 percent today to C$1.5724 versus sterling, the worst performer among major currencies, after data showed U.K. retail sales in February dropped more than economists estimated. The loonie fell 0.5 percent against the New Zealand dollar, the top performer, trading at 73.06 Canadian cents. New Zealand is another exporter of commodities.
Leaders of Canada’s three opposition parties said C$7.6 billion ($7.7 billion) in new measures announced March 22 by Finance Minister Jim Flaherty in his budget presentation weren’t enough to warrant their support. Opposition lawmakers hold a majority of seats in the House of Commons.
Gilles Duceppe, leader of the Bloc Quebecois, and Jack Layton of the New Democratic Party told reporters in Ottawa yesterday they’ll support the Liberal non-confidence motion.
Prime Minister Stephen Harper, speaking yesterday to reporters in Ottawa, said Canada’s economy isn’t a political game and the rejection of the budget will hurt the nation.
“The market will treat any political development as noise,” said David Watt, senior currency strategist at Royal Bank of Canada’s RBC Capital unit in Toronto. “It’s hard to see the political situation dislodge the Canadian dollar.”
Government bonds fell, pushing the yield on the two-year note up three basis points, or 0.03 percentage point, to 1.71 percent. The price of the 1.75 percent security maturing in March 2013 decreased 6 cents to C$100.08. The 10-year yield rose one basis points to 3.21 percent.
The number of Canadians receiving jobless benefits fell for the sixth time in seven months in January, Statistics Canada said. The number of regular beneficiaries declined 2 percent to 640,150. It dropped 9.2 percent from the same time a year ago.
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