Canadian Dollar Climbs Amid Crude Gains, Retail-Sales Growth

The Canadian dollar appreciated for a second day against its U.S. counterpart as crude oil advanced and the nation’s statistics agency reported retail sales growth that doubled economists’ predictions.

The currency rose against a majority of its most-traded peers. It pared an earlier advance against the greenback after U.S. stocks fell as optimism faded about the European Central Bank’s plans to loan 489 billion euros ($638 billion) to the region’s financial institutions.

“Foreign-exchange performance is exceptionally tight, so the upside surprise might be giving marginal support to the Canadian dollar,” David Watt, senior currency strategist in Toronto at Royal Bank of Canada’s RBC Capital unit, said in an e-mail message referring to the retail-sales report. “Oil prices are also up a bit, and holding their gains a bit better than other asset prices, so more marginal support.”

The loonie, as the currency is known for the image of the waterfowl on the dollar coin, appreciated 0.3 percent to C$1.0266 per U.S. dollar at 5 p.m. Toronto time. It earlier gained to C$1.0209, the strongest since Dec. 12. One Canadian dollar buys 97.41 U.S. cents.

Yields on Canada’s benchmark 10-year bonds rose three basis points, or 0.03 percentage point, to 1.95 percent. They touched 1.837 percent on Dec. 16, the lowest level in Bloomberg data going back to 1989. Canada’s 10-year bonds yielded one basis points less than equivalent-maturity U.S. Treasuries, compared with 32 basis points more on Sept. 5, the most this year.

Retail Sales

Canadian retail sales rose 1 percent to a seasonally adjusted C$38.6 billion ($37.6 billion) in October, led by increased receipts at car dealerships and gasoline stations, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News forecast a 0.5 percent gain, the median of 21 estimates.

The ECB awarded three-year loans to 523 banks in a so-called long-term refinancing operation.

“Although the ECB managed to get some new cash into the system, it remains to be seen how that cash is utilized,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank’s TD Securities unit, in an e-mail message. “I don’t think it really changes the overall view of the risks and challenges for the euro zone.” He predicts the loonie may weaken to about C$1.04 to C$1.05 into year-end.

Futures on crude oil, the nation’s largest export, advanced 1.8 percent to $98.94 a barrel in New York.

Monthly Loss

Canada’s dollar is among the worst performing major currencies this year and is headed for a 0.9 percent loss this month versus the greenback on concern a worsening crisis in Europe and slowing global growth will crimp demand for its raw materials.

“The market realized that a large demand for LTRO might actually be suggestive of large problems in the banking sector,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto, said in an e-mail message. “The Canadian dollar has been following along with broader markets.”