Canadian currency rises against most major peers on surging oil

Oil Speculation

Futures for West Texas Intermediate crude climbed as much as 3% to $112.24 a barrel in New York, the highest level since May 2011, while Brent crude rallied as much as 2.6% to $117.34 a barrel.

A U.S.-led strike on Syria in retaliation for the alleged use of chemical weapons in its civil war is probable within the next week, raising the possibility Brent may hit $150 should a widening conflict halt oil output in Iraq or other producers, according to Societe Generale SA.

Standard & Poor’s GSCI Index of 24 raw materials increased 0.6%.

“There’s still a case to be made for Canada outperformance against Australia, for example, in terms of the dollar-bloc commodity currencies, on the basis that support from the oil prices that will mitigate, militate against, significant CAD underperformance,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce, by phone from London. “The U.S. dollar continues to make good progress across the board as risk aversion is prevalent.”

The Aussie dollar dropped 0.8% to 93.37 Canadian cents, and New Zealand’s currency fell 0.4% to 81.32 Canadian cents.

The Bloomberg Dollar Index, which tracks the greenback against 10 major counterparts, rose 0.5% to 1,029.68.

U.S. gross domestic product increased an annualized 2.2% in the second quarter, more than first estimated, a government report tomorrow is forecast to show. Canada’s GDP shrank 0.4% in June, a Bloomberg survey estimated before data due Aug. 30.

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