June 21 (Bloomberg) -- Canada’s dollar rose against the majority of its most-traded counterparts as stocks and commodities rallied before a government confidence vote in Greece that may determine whether it avoids default.
The currency, sometimes called the loonie, advanced to the strongest level against the greenback in almost a week as oil, Canada’s biggest export, rose. The greenback fell on reduced safety demand on speculation Greece’s Prime Minister George Papandreou will win a confidence vote, supporting the euro.
“We’ve got a general risk-on day, which is helping,” said David Watt, senior currency strategist at Royal Bank of Canada’s RBC Capital unit in Toronto. “The Canadian dollar has underperformed a lot of these currencies for a long period of time, and now you see some reasons for the Canadian dollar to rise. Now you’re looking at commodities firming up, equities firming up.”
The Canadian currency appreciated 0.8 percent to 97.25 cents per U.S. dollar at 4:45 p.m. in Toronto, from 97.98 yesterday. It touched 97.12 cents, the strongest level since June 15. The currency rallied as much as 0.9 percent, the biggest intraday jump since June 14. One Canadian dollar purchases $1.0283.
The MSCI World Index of equities rose for a third day, climbing 1.6 percent. Crude oil for July delivery gained as much as 1.6 percent to $94.74 a barrel in New York.
The loonie, nicknamed for the aquatic bird on the C$1 coin, has dropped 2.5 percent this year against nine other developed- market currencies, according to Bloomberg Correlation-Weighted Currency Indexes. That compares with a 1.1 percent gain in Norway’s krone and a 1.4 percent drop in the Australian dollar.
The Canadian dollar remained higher even after a government report showed retail sales increased in April less than economists forecast.
Retail sales rose 0.3 percent that month to a seasonally adjusted C$37.4 billion ($38.3 billion) after a revised decline of 0.1 percent in March, Statistics Canada said today. The median forecast of 24 economists in a Bloomberg News survey was for a 0.4 percent gain.
“Despite having this decline off of expectations, I don’t see it as having a major impact,” said C.J. Gavsie, managing director for foreign-exchange trading at Bank of Montreal’s BMO Capital Markets unit in Toronto. “It’s the bigger-picture story on Greece today that’s holding dollar-Canada in check.”
Statistics Canada also said today its index of leading economic indicators rose 1 percent in May, twice the pace forecast by economists.
Canadian government bonds fell, pushing the yield on the benchmark 10-year note up one basis point, or 0.01 percentage point, to 2.98 percent. The price of the 3.25 percent security due in June 2021 dropped 10 cents to C$102.33.
Greece’s Papandreou is seeking to secure multiparty support for his government’s austerity measures, a condition for receiving aid needed to avoid a default. He called for the vote last week after opposition parties rejected pleas for national consensus and the prime minister’s handling of the crisis led to defections from his party.
--Editors: Dennis Fitzgerald, Greg Storey
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