Canada’s dollar gained to a more than four-month high versus its U.S. peer amid data suggesting North American job growth is accelerating and after European officials announced bond-purchasing plans.
The currency strengthened against the majority of its 16 most-traded counterparts after fewer Americans than forecast filed applications for unemployment benefits last week and ECB President Mario Draghi said policy makers had agreed on an unlimited debt-buying program. Canada’s dollar rose before reports tomorrow that are forecast to show the nation’s employers added jobs in August after a decline the prior month.
The decrease in jobless claims “filtered into the positive risk tone that was already evident in the market,” Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal (BMO), said in a telephone interview. “Now that we have the central bank out of the way, we shift our focus on to the employment numbers.”
Canada’s currency, nicknamed the loonie for the image of the waterfowl on the C$1 coin, appreciated 0.8 percent to 98.23 cents per U.S. dollar at 2:31 p.m. in Toronto. It touched 98.09, the strongest since April 30. One Canadian dollar buys $1.0180.
Crude-oil futures fluctuated in New York after rising as much as 2.5 percent earlier, the biggest gain since Aug. 3. Oil is Canada’s biggest export. The Standard & Poor’s 500 Index gained 1.9 percent, also the most since Aug. 3.
Technical Analysis
Canada’s dollar could appreciate to its strongest in more than a year against its U.S. peer if it breaks a key resistance level, according to Royal Bank of Canada, citing technical indicators.
Bearish sentiment around the U.S. currency is still “dominant,” making 98.01 an important resistance level for the loonie, George Davis, chief technical analyst for fixed-income and currency strategy in Toronto at the bank’s RBC Dominion Securities unit, wrote in a note today. Resistance refers to an area on a chart where sell orders may be clustered.
If the Canadian dollar strengthens past 98.01, it could reach 97.28 and then 96.34, Davis said. That would be the loonie’s strongest level since August 2011. The move would be a “slow grind,” he said.
Expectations of more central-bank stimulus, particularly from the ECB, are driving raw material prices up, helping commodity-linked currencies, Shaun Osborne, chief currency strategist atToronto-Dominion Bank (TD), said today in a note to clients.
Commodity Currencies
The dollars of Australia and New Zealand, commodities exporters like Canada, both gained against the greenback. The Aussie appreciated 1 percent to $1.0294 and the kiwi, as New Zealand’s dollar is known, rose 1 percent to 80.26 U.S. cents.
“There’s a bit of risk-on,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, said in a telephone interview. “Commodity-dollar currencies have gained against the U.S. dollar. There’s a bit of sentiment helping the entire dollar complex.”
The Bank of Canada yesterday kept its main interest rate unchanged and reiterated that an increase may be needed as domestic spending props up an economic recovery restrained by weak global demand for exports.
Canada’s AAA sovereign-debt rating was yesterday affirmed with a stable outlook by Fitch Ratings, which cited the nation’s fiscal discipline and a narrowing deficit in the world’s 11th- largest economy.
Jobless Claims
Jobless claims in the U.S., Canada’s biggest trading partner, decreased by 12,000 to 365,000 in the week ended Sept. 1, the fewest in a month, the Labor Department reported today in Washington. The median estimate of 48 economists surveyed by Bloomberg called for a drop to 370,000.
Companies added 201,000 workers, the biggest gain in five months, according to figures from Roseland, New Jersey-based ADP Employer Services. The median forecast of 41 economists surveyed by Bloomberg called for an advance of 140,000.
A Labor Department report tomorrow is forecast to show the U.S. added 130,000 jobs, according to economists in a separate Bloomberg survey. The unemployment rate held steady at 8.3 percent, economists forecast.
Canadian employers added 10,000 jobs in August, Statistics Canada is forecast to report tomorrow, after unexpectedly cutting 30,400 jobs the prior month. The employment rate is expected to remain steady at 7.3 percent, according to another survey.
Bond Purchases
Draghi said today at a press conference in Frankfurt that policy makers agreed to an unlimited bond-purchase program to regain control of interest rates in the euro area and fight speculation of a currency breakup.
The program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi said at a press conference in Frankfurt after the ECB held its benchmark rate at a record low of 0.75 percent.
The loonie has gained 3.4 percent this year in the largest advance among 10 developed-nation currencies monitored by Bloomberg Correlation-Weighted Indexes. The U.S. dollar has dropped 1 percent, the euro and yen have fallen 3.7 percent to lead decliners.
0 comments:
Post a Comment