06.09.201306:14:05UTC+00Canadian Dollar surges against counterparts on jobs-growth forecast

The Canadian dollar rallied versus the majority of its 16 most-traded counterparts before data tomorrow forecast to show the nation cut two months of jobs losses in an indications that the economy may be rising from a mid-year slowdown.

The currency pulled back versus the U.S. Dollar as unemployment claims in that country declined and its service industry progressed at the most rapid pace since 2008. Crude oil Canada's biggest export, spiked after American legislators took the first step to approving a military strike on Syria that could disrupt Middle Eastern fuel shipments. Tomorrow’s jobs data may reverse a string of below prediction data, from construction activity to retail sales, that contributed to the biggest monthly economic contraction since the 2009 recession in June.

Bonds, Oil

Canada’s 10-year benchmark bonds pulled back for a fifth straight day, with yields rising eight basis points, or 0.08 percentage point, to 2.8 percent. The 1.5 percent security maturing in June 2023 lost 67 cents to C$88.99.

‘Positive Numbers’

The Institute for Supply Management’s non-manufacturing index for the U.S. increased to 58.6, the fastest pace since at least January 2008, from 56 the prior month, the Tempe, Arizona-based group said today. The median projection in a Bloomberg survey of economists called for a decline to 55. Readings above 50 indicate growth in the industries that make up almost 90 percent of the economy.

FX Trading

Foreign exchange trading in Canada surged to an average $61.4 billion a day in April, the highest since 2008, according to a semi-annual survey by the Canadian Foreign Exchange Committee, released today. That was a 20 percent increase from the last survey in October last year, the biggest increase in six years.

“It’s possible some of the positive numbers we’ve been getting out of the U.S. have been supporting a stronger outlook for the U.S. economy,” said Emanuella Enenajor, an economist at Canadian Imperial Bank of Commerce’s CIBC World markets, by phone from Toronto. “Therefore oil, therefore the Canadian dollar.”

The Bank of Canada kept its main interest rate unaltered at 1 percent yesterday and reiterated that current financial policy remains appropriate as an expected rotation of demand to exports and investment is being delayed by slower growth abroad.

Options traders grew more bearish on the Canadian dollar for the first time in six days. The three-month so-called 25 delta risk reversal rate, which measures the premium charged for the right to buy the U.S. dollar against its Canadian counterpart versus contracts to sell, rose to 1.45 percent, from 1.43 percent yesterday.

The loonie has spiked 0.3 percent in the past week against nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index. The Australian dollar’s 2.8 percent increase was the largest and a 2.2 percent retreat made the yen the biggest loser.