Canadian Dollar Rises to Highest Level Since March 2008
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Whistler Real Estate Co Ltd, #137- 4370 Lorimer Road, Whistler, BC V0N 1B4 Canadian Dollar Rises to Highest Level Since March 2008 on Weekly Oil Gain by Clarles Mead (Feb. 25, 2011). Retrieved from www.bloomberg.com. |
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Canada’s currency climbed to its strongest level in almost three years against its U.S. counterpart as crude oil, the nation’s biggest export, had its biggest weekly gain since 2009.
The loonie, as the Canadian currency is known for the image of the aquatic bird on the C$1 coin, was poised for a 2.4 percent monthly increase versus the U.S. dollar before the Bank of Canada’s meeting next week.
“The loonie’s been doing very well over the last couple of sessions,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc. in Washington. “We could see the Bank of Canada upgrade some of their language regarding growth, and I think that could provide the Canadian dollar with a little bit of a boost.”
Canada’s dollar appreciated as much as 0.5 percent to 97.73 cents per U.S. dollar, the strongest level since March 7, 2008, before trading at 97.74 at 5 p.m. in Toronto, compared with 98.26 cents yesterday. It gained 1 percent on the week. One Canadian dollar purchases $1.0231.
Morgan Stanley boosted yesterday its 2011 growth forecast for the Canadian economy to 2.9 percent from 2.6 percent, citing higher exports.
“The improving growth dynamics should make the Bank of Canada more comfortable to resume its tightening cycle,” Yilin Nie, a New York-based currency strategist at Morgan Stanley, and David Cho, an economics analyst, wrote in a note to clients, predicting the benchmark lending rate will rise to 2 percent by the end of the year. “We view April as the most likely time for the bank to move away from the sidelines,” they wrote.
Rate Expectations
The Bank of Canada, which led the Group of Seven nations with three interest-rate increases last year, is expected to boost its benchmark by a quarter-percentage point in the second quarter, according to the average forecast in a Bloomberg News survey of 16 economists.
The central bank will hold its target rate on March 1 at 1 percent, where it has been since September, according to all of the 8 economists in a Bloomberg News survey. Bank of Canada Governor Mark Carney has called a strengthening loonie a risk to the economy.
“The market is looking for the Bank of Canada to hint that an early-summer rate hike is in the cards next week,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto.
Crude oil for April delivery gained 1 percent to $98.23 a barrel after rising yesterday to $103.41, the highest intraday price since Sept. 29, 2008. Futures surged 14 percent this week, the most since the five days ended on Feb. 27, 2009, over concern Libya’s political turmoil will reduce supplies.
Trade Surplus
Canada unexpectedly posted its first trade surplus in 10 months in December as energy and metals powered the biggest jump in exports in almost three decades, Statistics Canada said Feb. 11. Exports climbed 9.7 percent to C$37.8 billion, the most since February 1982 as energy shipments surged 25 percent and industrial goods such as metals rose 7 percent to a record.
Government bonds rose today, with the yield on the 10-year security falling three basis points, or 0.03 percentage point, to 3.29 percent. The price of the 3.5 percent note maturing in June 2020 increased 22 cents to C$101.68.
The loonie briefly pared its gain after the U.S. Commerce Department reported that America’s economy grew at a 2.8 percent annual rate in the fourth quarter, slower than previously calculated. The U.S. is Canada’s biggest trading partner. |