08.05.201302:48:19UTC+00Canadian Dollar level up for the third day as RBA lessens target rate

Canada’s dollar bolstered versus its U.S. counterpart for a third day as the Reserve Bank of Australia trim its benchmark interest rate to a record 2.75 percent, intensifying the search for greater-yielding assets.

The loonie, which is the nickname of the canadian dollar gained versus the majority of its most-traded peers as German factory orders unexpectedly increased in March, proposing the region’s biggest economy is beginning to progress again and spurring risk appetite.

“The catalyst was Aussie-Canada selling,” Jack Spitz, managing director of foreign exchange in Toronto at National Bank of Canada (NA), said of the loonie’s rally. “It was on the back of the RBA announcement, which made the Aussie dollar weaker, but really the motivation for the move this morning was likely on the back of better-than-expected German factory orders.”

Canada’s dollar acquired 0.3 percent increase to C$1.0042 per U.S. dollar at 5 p.m. in Toronto. One Canadian dollar purchases 99.58 U.S. cents.

Canadian government bonds dropped, with the yield rising two basis points, or 0.02 percentage point, to 1.82 percent. The 1.5 percent note maturing in June 2023 gave up 21 cents to C$97.07.

Oil, the country’s largest export, diminished 0.7 percent to $95.52 a barrel in New York. The Standard & Poor’s 500 improves 0.5 percent to 1,625.96.

‘Broader Themes’

The loonie forged ahead as much as 1.1 percent to C$1.0205 per Australia’s dollar, the largest climb since July and the strongest level since October.

“Data is limited today, leaving CAD to trade off of broader themes,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS), wrote in a client note.

The cost to insure versus declines in the Canadian dollar against its U.S. counterpart fell one day after reaching their peak level in more than a week.

The three-month so-called 25-delta risk reversal rate declined to 1.1025 percent from 1.1275 percent yesterday, its highest point since April 25. Risk reversals measure the premium on options contracts to sell Canadian dollars versus buying U.S. contracts that do the opposite.

The loonie is approaching a technical measure that suggests it will soon fall in value. The 14-day relative strength index against the U.S. dollar was 65.7 percent, at almost the 70 percent level that signals it will go down.

Hedge funds and other large speculators last week decreased their bets the Canadian dollar will decline against the greenback, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers on a decline in the Canadian dollar compared with those on a gain -- so-called net shorts -- was 64,848 on April 30, compared with net shorts of 71,679 a week earlier.

Canada’s currency has acquired 1.6 percent in the last month versus nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index. The Australian dollar has submerged 2.2 percent while the greenback has acquired to increase by 0.2 percent.