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Canadian Dollar Fluctuates as Commodities Rise, Stocks Decline

The Canadian dollar fluctuated versus its U.S. counterpart as commodity prices advanced while stocks declined amid shifting risk sentiment.

The loonie, as the currency is nicknamed for the image of the waterfowl on the C$1 coin, gained earlier as the Standard & Poor’s GSCI Index of 24 raw materials advanced and oil snapped two days of losses. The currency rose last week as September jobs gains that were five times higher than forecast added to speculation the Bank of Canada may be moving closer to boosting interest rates.

“The Canadian dollar continues to be from a relative value position a buy,” Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto, said in a phone interview. “The fundamental argument is still looking to be positive for the Canadian dollar based on the decent payrolls and the ongoing dialog coming from the Bank of Canada officials that they need to normalize policy as soon as possible.”

Canada’s currency was little changed at 97.72 cents per U.S. dollar at 10:41 a.m. in Toronto, after gaining as much as 0.3 percent. One Canadian dollar buys $1.0232.

Oil, Commodities

Oil advanced 1.4 percent to $90.62 a barrel in New York, paring two days of losses and trading above $90 dollars a barrel for the first time in two days. The S&P GSCI commodities gauge advanced 1 percent. The Standard & Poor’s 500 Index declined 0.4 percent.

The Canadian dollar is consolidating gains following the Oct. 5 employment report, George Davis, chief technical analyst for fixed income and currency strategy in Toronto at Royal Bank of Canada, said in a note to clients. The loonie is forecast to trade in a range of 97.40 to 97.80 today, Davis said in the note.

Canadian bonds declined, with the yield on the benchmark 10-year note adding one basis point, or 0.01 percentage point, to 1.81 percent. The 2.75 security due June 2022, slipped 5 cents to C$108.27.

The Bank of Canada will auction C$2.7 billion ($2.8 billion) in three-year notes tomorrow. The last sale of this note maturity on Aug. 29 was C$2.9 billion and yielded 1.278 percent with a bid-to-cover ratio of 2.73, measuring the level of bids versus the amount of debt for sale.

The loonie remained higher as German Chancellor Angela Merkel issued a statement following a discussion with Greek Prime Minister Antonis Samaras.

Merkel Views

Merkel visited Greece today for the first time since the debt crisis began in 2009 after the region’s ministers yesterday hailed the country’s determination to cut its budget and reshape its economy, raising the chances that aid will keep flowing to Greece. “I repeat what I said in Berlin. I want Greece to stay in the euro,” Merkel said during a joint press conference with Samaras.

“We’ve seen some movement to and fro, with the last uptick in the Canadian dollar coinciding with the pullback in the euro,” Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal, said in a phone interview. “The market seems less than enthusiastic about Merkel’s speech in Greece not offering a whole lot new there and paying more lip service to the crisis.”

Finance ministers from all the 27 countries in the European Union convened in Luxembourg today in the lead up to a summit of the region’s leaders in Brussels on Oct. 18-19.

Canadian housing starts were 220,215 at a seasonally adjusted annual pace in September, Ottawa-based Canada Mortgage & Housing Corp. said on its website today. Economists forecast a reading of 205,000, according to the median of 22 responses to a Bloomberg News survey.

Canada’s dollar has gained 2.7 percent this year against nine developed-nation counterparts tracked by Bloomberg Correlation-Weighted Currency Indexes. The greenback has dropped 2.1 percent.

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