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The Canadian dollar rose for a third day to almost its highest level in a month as crude oil, the nation’s largest export, remained above $100 per barrel for the 18th day.

The currency rose against the majority of its most-traded peers as the Standard & Poor’s GSCI Index of 24 commodities snapped three days of losses. Canada will report the economy grew 0.3 percent in May from 0.1 percent the month before on July 31, according to a Bloomberg survey of 18 economists.

“We have three-digit crude and it’s holding above $100 even though the market gets the sense it’s getting a bit frothy up here, but that is supportive of the Canadian dollar,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada by phone from Toronto.

The loonie, as the Canadian dollar is known, gained 0.1 percent to C$1.0264 per U.S. dollar at 10:57 a.m. in Toronto. On July 25 the currency touched C$1.0255, the strongest since June 19. One loonie buys 97.43 U.S. cents.

The currency has gained 2.5 percent this month versus the greenback while dropping 3.5 percent this year.

Canada’s 10-year government bonds fell, with yields rising one basis point, or 0.01 percentage point, to 2.46 percent. The 1.5 percent security maturing in June 2023 lost six cents to C$91.70. Yields on Canada’s 10-year bonds have increased two basis points this month.

Oil Market

Crude oil was little changed at $104.67 per barrel and the discount for Canadian crude oil compared with U.S. benchmarks was at $20.75, down from $22 on July 23, the widest since May. Crude prices have jumped 8.2 percent this month, the biggest monthly gain since October 2011.

“Oil has been very, very bid, it’s been on an uptrend and has basically been correcting, so I think that’s been a positive support for the Canadian dollar,” said Sebastien Galy, a senior foreign-exchange strategist at Societe General SA, by phone from New York.

The monthly volume of foreign-exchange products in Canada, including spot transactions, outright forwards and foreign exchange swaps, increased 20.4 percent in April to $61.4 billion a day from $51 billion in October last year, the Canadian Foreign Exchange Committee said today in a statement.

Volume increased 29 percent for spot transactions, 42 percent for outright forwards and 12 percent for foreign exchange swaps, according to the statement.

The loonie has gained 0.7 percent in the past month against nine developed nation currencies tracked by the Bloomberg Correlation-Weighted Index. The U.S. dollar has declined the most at 2 percent.
Source: Bloomberg

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