By Chris Fournier and Ruby Madren-Britton
Oct. 6 (Bloomberg) -- Canada’s currency advanced to the strongest level in more than a year as stocks and crude oil, the nation’s biggest export, rose amid signs the global economic recovery may accelerate.
The Canadian dollar gained for a third day after the Reserve Bank of Australia unexpectedly raised interest rates and as the U.S. currency weakened against all but one of its 16 most-traded counterparts, the pound. Business spending in Canada increased last month more than forecast, a report showed.
“Data-wise and market-wise, everything lined up for the Canadian dollar to do well today,” said David Watt, a senior currency strategist in Toronto at RBC Capital Markets, a unit of Canada’s biggest bank.
The Canadian dollar, nicknamed the loonie, gained 0.9 percent to C$1.0605 per U.S. dollar at 4:42 p.m. in New York, from C$1.0697 yesterday. It touched C$1.0547, the strongest level since Oct. 1, 2008. One Canadian dollar purchases 94.30 U.S. cents.
The Ivey purchasing managers’ index showed business spending in Canada increased in September more than economists expected. The measure rose to 61.7 from 55.7 in August, compared with a Bloomberg News survey that estimated a rise to 56.2. A reading of more than 50 indicates the number of firms saying business improved was higher than the number saying it slid.
The Australian central bank’s unexpected interest-rate increase was the first boost in borrowing costs among the Group of 20 nations since the financial crisis began.
“The RBA rate increase indicated globally that we’re going to see a recovery, and that’s given the market confidence to invest in high-risk currencies like the Canadian dollar,” said Darren Richardson, a senior corporate dealer at Toronto-based CanadianForex Ltd., an online foreign-exchange dealer.
December gold futures touched $1,045 an ounce in New York, topping the previous record of $1,033.90 set in March 2008. Crude oil for November delivery advanced as much as 2.2 percent to $71.97 a barrel on the New York Mercantile Exchange before trading at $71.05, up 0.9 percent. Raw materials account for more than half of Canada’s export revenue.
The Standard & Poor’s 500 Index rose 1.4 percent. The MSCI World, a benchmark index for stocks in 23 developed markets, climbed 1.9 percent.
Canada’s dollar could give up some of its recent gains against the greenback if employment data due on Oct. 9 fail to meet forecasts, according to Jack Spitz, managing director of foreign exchange at National Bank of Canada.
“There are some uncertainties with respect to Canadian payroll numbers on Friday,” Toronto-based Spitz said. “We do run the risk of a higher U.S. dollar against the Canadian dollar.
Employers in Canada likely added a net 5,000 jobs last month, according to the median forecast of 23 economists surveyed by Bloomberg. Estimates ranged from a loss of 30,000 positions to an increase of 20,000.
Canadian building permits rose in August more than economists expected, a Statistics Canada report showed, as municipal workers in Toronto returned to work after a strike. The total value of permits issued by municipalities rose 7.2 percent to C$5.02 billion ($4.72 billion), the report showed. Economists in a Bloomberg survey forecast a gain of 5 percent.
Government of Canada bonds fell. Two-year notes declined for the first time in five days, pushing the yield up eight basis points, or 0.08 percentage point, to 1.25 percent. The price of the 1 percent security due in September 2011 dropped 15 cents to C$99.53. The 10-year note’s yield rose six basis points to 3.29 percent.
The Bank of Canada is scheduled to auction C$3.5 billion ($3.3 billion) tomorrow of 1.25 percent securities due in December 2011.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net; Ruby Madren-Britton in New York at rmadrenbritt@bloomberg.net
Last Updated: October 6, 2009 16:46 EDT
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