Canada's dollar advanced against its U.S. counterpart for the first time in three days as investors sought higher-yielding assets, sending global stocks up.


Gains by the loonie, as the currency is nicknamed, were tempered as crude oil, Canada’s biggest export, traded below $99 a barrel. The U.S. dollar fell against most major peers as increased risk appetite damped demand for refuge currencies.

“The U.S. dollar has been sold off in general across the board, and that has helped dollar-Canada,” said Matt Perrier, director of currency sales at Bank of Montreal’s BMO Capital Markets unit in Toronto. “We could see the Canadian dollar strengthen a little bit further.”

Canada’s currency strengthened 0.7 percent to 97.44 cents per U.S. dollar at 1:25 p.m. in Toronto, from 98.09 cents yesterday. It tumbled to 98.52 cents on June 3, the weakest since March 21. One Canadian dollar buys $1.0263.

Government bonds  fell, pushing the yield on Canada’s benchmark 10-year note up six basis points to 3.05 percent. A basis point is 0.01 percentage point. The price of the 3.25 percent security maturing in June 2021 dropped 49 cents to C$101.73. Government bonds have returned 2 percent this year after gaining 6.2 percent in 2010, according to a Bank of America Merrill Lynch index.

The Canadian dollar will stay in a range of 97.20 cents to 98 cents until a jobs report June 10, according to Blake Jespersen, director of foreign exchange at Bank of Montreal.

Canadian Jobs

Employers added a net 20,000 jobs to payrolls in May after a 58,300 gain in April, and the jobless rate remained at 7.6 percent, Statistics Canada will probably say on June 10, according to the median forecast of economists surveyed by Bloomberg News.

“Until we see a number on Friday, it’s really going to stay in that tight range,” Jespersen said. The firm forecast net payroll additions of 5,000.

The Canadian dollar will trade at 97 cents versus the greenback at year-end before weakening to parity by the end of 2012, according to the median forecast of 38 economists and analysts surveyed by Bloomberg News.

Canada’s dollar strengthened against 10 of its 16 most- traded counterparts. It rose the most against the Swiss franc, gaining 1.1 percent to 85.99 centimes.

The loonie was little changed versus the euro at C$1.4305 after yesterday reaching the weakest level in 15 months versus the shared currency, C$1.4371.

Poised for Bounce

“The Canadian dollar was cheap, and poised for a bit of a bounce,” said David Watt , senior currency strategist at Royal Bank of Canada’s RBC Capital Markets unit in Toronto.

The loonie fell on June 3 after U.S. Labor Department data showed American payrolls grew at the slowest pace in eight months, increasing by 54,000 jobs in May, less than a third the 165,000 that economists in a Bloomberg survey forecast.

Canada ships about 75 percent of its exports to the U.S.

“The market is still concerned that the U. S. economy is slowing quite dramatically, and that’s going to drag down Canada,” Bank of Montreal’s Jespersen said. “People are pretty pessimistic about this employment number on Friday. I think it’s going to set the tone for the next few weeks.”

The Standard & Poor’s 500 Index advanced 0.6 percent, and the MSCI World Index gained 0.5 percent. Crude for July delivery traded at $98.16 a barrel in New York, down 0.9 percent, after falling earlier as much as 1.3 percent to $97.74.

Source: Bloomberg 

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