Bloomberg News

Canada’s Dollar Advances as European Debt-Crisis Concern Eases

November 17, 2011

Nov. 17 (Bloomberg) -- Canada’s dollar rose for the first time in four days after the European Central Bank was said to buy more Italian bonds, reducing demand for a refuge.

The Canadian currency erased declines versus its U.S. counterpart as Italian bond yields reversed course and fell for a second day.

“People are focusing on the European headlines,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a telephone interview. “Dollar-Canada is still in the range we’ve seen over the last couple of days.”

The loonie, as the Canadian currency is known for the aquatic bird on the C$1 coin, rose 0.3 percent to C$1.0217 per U.S. dollar at 9:11 a.m. in Toronto. One Canadian dollar buys 97.88 U.S. cents. It has traded in a range of C$1.0159 to C$1.0288 since Nov. 15.

The Canadian dollar dropped earlier as much as 0.4 percent after Spanish yields rose to a euro-lifetime high as the Treasury sold 3.56 billion euros of a new January 2022 benchmark security. It paid an average of 6.975 percent, compared with 5.433 percent at a sale in October.

The loonie appreciated after two people with knowledge of the trades said the ECB bought more Italian government bonds, following acquisitions earlier today. The people declined to be identified because the deals are private.

Foreigners bought a net C$7.35 billion ($7.15 billion) of Canadian securities in September, led by federal government short-term debt. They purchased C$7.24 billion of treasury bills, including C$5.28 billion from the Canadian government, Ottawa-based Statistics Canada said today. Non-residents also sold C$612 million of Canadian bonds in September and bought a net C$721 million of stocks.

Canada’s consumer price index rose at an annualized 2.8 percent pace in October, decelerating from the previous month’s 3.2 percent rate, according to the median forecast of 23 economists in a Bloomberg News survey before tomorrow’s report.

--Editors: Kenneth Pringle

To contact the reporter on this story: Chris Fournier in Halifax, Nova Scotia at cfournier3@bloomberg.net

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


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