Canada’s dollar rallied, pushing the
value above that of its U.S. counterpart for the first time in
three months, on speculation global growth will sustain demand
for natural resources such as oil, the nation’s biggest export.

The currency gained for a fifth week versus the greenback,
the longest winning streak since October 2010, even after a
report showed yesterday that Canada’s economy unexpectedly lost
jobs in July. Bank of Canada Governor Mark Carney said two days
ago that the nation is in a “very different place” than
economies such as the U.K.’s that are in crisis, and may require
higher interest rates. Factory sales increased in June, a
government report is forecast to report on Aug. 16.

“The main driver by far of the Canadian dollar is global
risk appetite,” Steven Englander, head of Group-of-10 currency
strategy in New York at Citigroup Inc., said in a telephone
interview yesterday. “As long as that is switched on, Canada
looks good.”

Canada’s currency, nicknamed the loonie for the waterfowl
on the one-dollar coin, strengthened 1 percent this week to
99.11 cents per U.S. dollar. One Canadian dollar buys $1.009. It
was the first weekly close for the loonie beyond parity since
the five days ended May 4.

Futures traders increased bets that the Canadian dollar
will gain against the greenback for a second consecutive week,
according to figures from the Washington-based Commodity Futures
Trading Commission released yesterday.

Net Longs

The difference in the number of wagers by hedge funds and
other large speculators on an advance in the Canadian dollar
compared with those on a drop, known as net longs, was 19,122
contracts as of Aug. 7.

Government bonds were little changed this week, with the
yield on the benchmark 10-year note rising about one basis
point, or 0.01 percentage point, to 1.78 percent. The 2.75
percent securities maturing in June 2022 dropped 15 cents to
C$108.68.

The government will auction C$3.4 billion ($3.43 billion)
in five-year notes Aug. 15. The securities carry a 1.5 percent
coupon and mature in September 2017.

The currency was little changed yesterday after Statistics
Canada said the economy lost 30,400 jobs. While the decline was
the most since October 2011, all were part-time positions.

The jobless rate rose to 7.3 percent. Economists projected
the unemployment rate would remain unchanged at 7.2 percent and
that employment would increase by 6,000, according to the median
in a Bloomberg News survey of 25 economists.

‘Decent Appreciation’

“Some disappointing numbers directly from Canada does help
to reduce some of the reasons to be long the Canadian dollar,”
David Mann, regional head of research for the Americas at
Standard Chartered in New York, said in a telephone interview.
“If you look at the Canadian dollar in the context of where
we’ve been going since June, it’s had a pretty decent
appreciation.”

The loonie rose 1.3 percent in the past month against nine
major counterparts, according to the Bloomberg Correlation-
Weighted Indexes. It has gained 3 percent this year, while the
U.S. dollar lost 0.4 percent.

Canada’s dollar will end the year at C$1.02 per U.S.
dollar, according to median estimate of 38 forecasters surveyed
by Bloomberg News.

The Bank of Canada will raise its 1 percent overnight
target rate by a quarter-percentage point by the second quarter
of 2013, according to the weighted forecast in a Bloomberg
survey of 21 economists.

Manufacturing Sales

Oil for September delivery fell 49 cents to settle at
$92.87 a barrel on the New York Mercantile Exchange yesterday.
The decline trimmed a weekly advance to 1.6 percent. It was
the fourth gain in five weeks.

The country’s manufacturing sales grew 0.3 percent in June
from the previous month, according to the median estimate of
economists surveyed by Bloomberg. Sales fell 0.4 percent in May.
Statistics Canada is scheduled to release data on monthly
manufacturing sales Aug. 16.

“In general, those anchored to the U.S. should still do
well in this world,” Alan Ruskin, global head of Group-of-10
foreign-exchange strategy at Deutsche Bank AG in New York, said
of the Canadian dollar in a phone interview yesterday.

To contact the reporter on this story:
Lindsey Rupp in New York at
lrupp2@bloomberg.net

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

Article source: http://www.businessweek.com/news/2012-08-11/canada-dollar-gains-for-fifth-week-on-global-growth-optimism

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