Canada Dollar Rises to 2-Month High on Optimism Oil Losses Doneby
Currency rebounds from 13-year low, among best performers
Loonie is one of the most correlated to crude price trends
The Canadian dollar rose to a two-month high as investors speculate the price of oil, one of the nation’s biggest exports, won’t extend its losses.
The currency strengthened even as the currency remains highly correlated to the price of crude, which declined Thursday. Oil, until last year Canada’s largest export, is trading above $30 a barrel after falling more than 25 percent this year on signs that a global supply glut won’t ease soon while demand may stay muted as worldwide economic growth slows.
"The idea that oil prices may be close to a base is certainly supportive, as is the more material rally in other commodities such as copper and iron ore," analysts including Shahab Jalinoos, global head of foreign-exchange strategy at Credit Suisse Group AG in New York, said in a note.
The Canadian dollar is bouncing back from a 13-year low reached last month in a climax to the longest, deepest depreciation in its history. The nation’s policy makers are counting on a weaker currency to transition away from its dependency on commodity exports to a more manufacturing-based economy.
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, gained 1 percent to C$1.3562 per U.S. dollar at 1:34 p.m. in Toronto, reaching the strongest on a closing basis since Dec. 7. One Canadian dollar buys about 73.73 U.S. cents.
The curency has advanced 2 percent against the dollar this year, the third-best performer among major currencies.
Among currencies of major oil exporters, the Canadian currency, along with Russia’s ruble, has the highest positive correlation with the commodity. The loonie’s 120-day correlation coefficient with oil is 0.61. A value of 1 means the two assets move in lockstep.