23.04.201305:40:35UTC+00Canadian Dollar bolster against most major counterparts as crude oil rises

The Canadian dollar boost versus the majority of its 16 most-traded counterparts as crude oil, the country’s biggest export, boost for a third day and traders bet the country would be less affected by declining metal prices.

The currency strengthened against the dollars of its fellow commodity exporters Australia and South Africa on speculation Canada will be least hurt by recent weakness in metals. Copper, nickel and gold have all fallen this year after gold posted its largest daily drop in 33 years last week. It fluctuated versus its U.S. counterpart as existing home sales in the U.S. gave up 0.6 percent last month.

“There was a big sell-off in commodities the last couple weeks and I think some of the other typically commodity-based currencies like the Aussie and the kiwi probably got hit more percentage wise than the Canadian dollar,” said David Bradley, director of foreign-exchange trading in Toronto at Scotia Capital Inc., a unit the Bank of Nova Scotia (BNS), using the nicknames for the Australian and New Zealand currencies. “It’s not the Canadian dollar, it’s just the other currencies are softer against the Canadian dollar. The Canadian dollar is doing nothing.”

The loonie, as the Canadian dollar’s nickname, was little changed at C$1.0256 per U.S. dollar at 5:00 p.m. in Toronto. It touched C$1.0294 on April 17, the worst point since March 13. One loonie purchases 97.50 U.S. cents.

Bonds Increase

The cost to insure versus losses in the Canadian dollar against its U.S. peer advance to almost the highest point in six weeks. The three-month so-called 25-delta risk reversal rate touched 1.13 percent. Risk reversals measure the premium on options contracts to sell Canadian dollars versus purchasing U.S. contracts that do the opposite.

Canada’s benchmark 10-year government bonds were little changed, with yields at 1.7 percent. The 1.5 percent security maturing in June 2023 acquired 6 cents to C$98.13.

The Bank of Canada will auction C$3.3 billion ($3.2 billion) of 1.5 percent notes on April 24. The securities mature in August 2015.

Canada’s economy will lag behind global progress after outperforming in the last five years, held back by weaker commodity prices controlling growth in the resource sector and consumers paring back record debt, bond rating company Standard & Poor’s said in a report published April 19.

Oil, Stocks

Crude oil, the country’s biggest export, bolstered 0.9 percent to $88.76 per barrel while the S&P 500 Index of U.S. stocks surged 0.5 percent.

The loonie traded at an almost six-week low versus its U.S. counterpart as American home sales unexpectedly dive down last month, indicating the Canadian economy won’t get help from its biggest trading partner.

Purchases of previously owned homes in the U.S., tabulated when a contract closes, fell to a 4.92 million annual rate last month, figures from the National Association of Realtors displayed today in Washington. The median forecast of 75 economists surveyed by Bloomberg predicted sales would skyrocket to a 5 million rate.

“The fact that we seem to be hitting a bit of a soft patch in U.S. data, this morning’s release confirms that, suggests we could be entering a phase where we see a little bit more risk- on/risk-off dynamics in the market, so in that sense weak U.S. data would actually be CAD negative,” said Greg T. Moore, currency strategist at Toronto-Dominion Bank (TD), by phone from Toronto. “The Canadian recovery is sort of built on an export- driven thesis, and that primarily is built on U.S. demand, so if we don’t have the U.S. demand we don’t have a Canadian recovery.”