Bloomberg News

Canadian Dollar Touches Strongest in a Month on Chinese Data

October 24, 2011

Oct. 24 (Bloomberg) -- Canada’s dollar touched the strongest level in a month after a report showed China’s manufacturing may grow in October for the first time in four months, increasing demand for riskier assets.

The loonie, as the currency is nicknamed, rose for a third day against its U.S. counterpart after European leaders meeting in Brussels yesterday outlined plans to assist banks, heading toward a revamped strategy to resolve the region’s debt crisis. Bank of Canada policy makers meeting tomorrow are forecast to hold the central bank’s policy interest rate unchanged at 1 percent. Stocks and commodities rose.

“It’s a continuation of the positive risk sentiment that seems to be going through the market,” said Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal.

Canada’s currency advanced 0.3 percent to C$1.0030 per U.S. dollar at 5:01 p.m. in Toronto, having earlier touched C$1.0022, the strongest since Sept. 21, which was also the last time the currency traded at parity with the greenback. It weakened against nine of its 16 most-traded peers. One Canadian dollar buys 99.63 U.S. cents.

Crude oil, Canada’s biggest export, added 4.9 percent to $91.81 a barrel. The Standard & Poor’s 500 Index climbed 1.3 percent, while Canada’s benchmark S&P/TSX Composite Index added 1.8 percent.

Policy Update

Bank of Canada policy makers will announce their next rate decision tomorrow at 9 a.m. Toronto time. The bank will keep its rate unchanged at 1 percent, according to all 27 economists surveyed by Bloomberg News.

Also tomorrow, Statistics Canada will report retail sales for August. Sales probably increased 0.3 percent from July, according to the average estimate in a Bloomberg survey of 22 economists.

The Bank of Canada will release its monetary policy report on Oct. 26, updating its forecasts for the country’s economy that were last revised July 20.

Government of Canada 10-year bonds were unchanged at 2.36 percent. The price of the 3.25 percent securities maturing in June 2021 fell 3 cents to C$107.57.

Canada will provide details of its three-year bond offering on Oct. 27. The auction is scheduled for Nov. 2.

European Talks

European leaders yesterday held their 13th crisis summit in 21 months, debating how to cut Greece’s debt burden, boost the firepower of the region’s bailout fund and bolster banks ahead of another meeting on Oct. 26.

“The market seems to think that in between the Sunday summit and the one coming up on Wednesday, Germany and France are going to come up with a concrete plan to address the European periphery risks,” Perrier said.

The loonie has weakened 1.2 percent in the past month, according to Bloomberg Correlation-Weighted Currency Indexes, a gauge of 10 developed-nation currencies. The greenback has declined 3.9 percent, and the yen has lost 3.2 percent of its value.

“Dollar-Canada should be well supported around C$1.0050,” said Shaun Osborne, chief foreign-exchange strategist at Toronto-Dominion Bank’s TD Securities unit in Toronto, in a telephone interview. “There’s very good, very consistent demand for U.S. dollars around that point.”

--Editors: Paul Cox, Greg Storey

To contact the reporters for this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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