Canada’s Dollar Rises as Stocks Gain, Oil at Almost 2-Week High

Canada’s dollar appreciated for a fourth straight day in the longest winning streak since April as global stocks gained and crude oil, the nation’s largest export, traded at almost a two-week high.

The loonie, as the currency is also known, touched the strongest level versus the U.S. dollar in almost seven weeks after Greek lawmakers approved a second bill on an austerity plan to head off a default. Government data yesterday showed consumer prices in Canada rose last month at the fastest since 2003. The currency stayed higher today after another report showed economic growth in April beat forecasts it would shrink.

“Risk is back on today,” said C.J. Gavsie, managing director for foreign-exchange trading at Bank of Montreal’s BMO Capital Markets unit in Toronto. “After the most recent CPI number, we are going to see Canada continue to strengthen.”

The Canadian currency appreciated 0.6 percent to 96.34 cents per U.S. dollar at 5 p.m. in Toronto, compared with 96.95 cents yesterday. It touched 96.25 cents, the strongest level since May 13. One Canadian dollar buys $1.0380.

“The 96.5 level in Canada terms is sticky,” said Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets unit in Toronto. “It was stuck here several times on previous dips lower,” he said, referring to drops in the greenback versus the loonie.

Bonds Fall

Government bonds fell, pushing the yield on the benchmark 10-year note up three basis points to 3.11 percent. It touched 3.14 percent, the highest since May 20. A basis point is 0.01 percentage point. The price of the 3.25 percent security maturing in June 2021 decreased 22 cents to C$101.20.

Canada will auction C$3.5 billion ($3.6 billion) of five-year notes on July 6, according to a statement today on the Bank of Canada’s website. The 2.75 percent securities mature in September 2016.

Canada’s dollar advanced 0.5 percent on the month versus its U.S. counterpart. It was up 0.8 percent on the quarter that ended today and is 3.6 percent higher this year. The currency rose yesterday by the most since December on an intraday basis after the inflation report and as debt-strapped Greece’s parliament approved the austerity plan.

The loonie extended gains today versus the greenback after Greek lawmakers voted 155-136 to implement the 78 billion-euro ($113 billion) package of budget cuts and state asset sales, a key to receiving further international financial aid.

The Standard & Poor’s 500 Index rose 1 percent in its fourth daily gain. Crude oil for August delivery gained 0.4 percent to $95.10 a barrel in New York after reaching $95.84 yesterday, the highest level since June 15.

‘Down the Road’

“Financial European issues were pushed down the road,” said Firas Askari, head currency trader in Toronto at Bank of Montreal’s BMO Capital unit. “The Australian dollar and the loonie are benefiting.”

Australia’s dollar gained 0.4 percent to $1.0722 after touching $1.0751, the strongest level since June 7. The Aussie slipped 0.2 percent versus the Canadian currency to C$1.0329.

Canada’s economy stalled in April as automobile production was disrupted by natural disasters in Japan, data showed. Output in the world’s 11th largest economy was little changed at a seasonally adjusted annual rate of C$1.26 trillion ($1.31 trillion), Statistics Canada said. Economists in a Bloomberg survey forecast GDP contracted 0.1 percent.

The economy grew 2.8 percent from a year earlier, the data showed, compared with a revised 2.9 percent gain in April 2010.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE