Jan. 23 (Bloomberg) -- Canada’s dollar appreciated versus its U.S. counterpart to within a cent of parity as crude oil, the nation’s largest export, advanced and the outlook for global economic growth improved.
The Canadian currency added to last week’s rally as an index of stocks in developed nations gained. Leading economic indicators increased for a sixth month in December, rising 0.8 percent, Statistics Canada said today. Oil rose for the first time in four days after the European Union agreed to ban oil imports from Iran.
“It’s still general risk sentiment” that’s helping the Canadian dollar, John Curran, a senior vice president in Toronto at CanadianForex Ltd., an online foreign-exchange dealer, said in a telephone interview. “I think it’s crazy that people are buying Canada against the U.S. dollar at these levels. It’s all going to go pear-shaped once Europe comes back into view. People are still thinking no news is good news.”
The currency, nicknamed the loonie, appreciated 0.5 percent to C$1.0086 per U.S. dollar at 5 p.m. Toronto time. One Canadian dollar buys 99.15 U.S. cents. The Canadian dollar rose 1 percent last week.
Oil for March delivery gained $1.41 cents, or 1.4 percent, to $99.87 a barrel. The EU’s sanctions raised concern that retaliation from the Islamic Republic may disrupt oil supply from the Middle East.
The MSCI World Index rose 0.6 percent. The Standard & Poor’s TSX/Composite Index, Canada’s main stock gauge, advanced 1 percent.
Canadian government bonds fell for a fourth day, driving benchmark 10-year yields up two basis points, or 0.02 percentage point, to 2.09 percent. The 3.25 percent securities due in June 2021 dropped 21 cents to C$109.86.
“The Canadian dollar is benefiting from tentative signs of cyclical rebound in global economic growth,” Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd., wrote in an e-mail message. “While it is still too early to give the ‘all-clear,’ given downside risks to growth still out there, the market appears to be prepared to give it the benefit of the doubt.”
The rise in Canada’s leading economic indicators followed a November increase that was revised to 0.9 percent from 0.8 percent, Ottawa-based Statistics Canada said. Economists surveyed by Bloomberg News forecast a 0.6 percent rise for December, based on the median of eight estimates. The average monthly increase over the past decade is 0.4 percent.
The Canadian dollar also traded within one tenth of a cent of a 15-year low versus its Australian counterpart. The loonie was little changed at C$1.0617 today, after dropping to C$1.0663 yesterday. It reached C$1.0666 per Australian dollar Oct. 28, the weakest level since May 1997.
“The Canadian dollar is underperforming other risk-sensitive currencies after Mr. Carney expanded upon his doom-and-gloom outlook for global growth and the Canadian economy,” John Curran, a senior vice president in Toronto at CanadianForex Ltd., an online foreign-exchange dealer, said in a note to clients referring to Bank of Canada Governor Mark Carney. Carney said yesterday Canada must explore new export markets such as China because the economy of the U.S., Canada’s biggest trading partner, may take years to recover from its current struggles.
The weakness in the U.S. economy is costing about C$30 billion ($29.6 billion) in lost Canadian exports, Carney said in an interview on CTV’s ‘Question Period.’
Canada’s dollar is the sixth best-performing major currency against the U.S. dollar today, according to a Bloomberg measure tracking 16 currencies. Norway’s krone is the best-performing currency and Taiwan’s dollar is the worst.
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