The Canadian dollar (FOREX:CADUSD) appreciated for the first time in five days, rising from a more than three-year low, amid speculation employment growth may suggest stronger economic improvement than the Bank of Canada indicated.
The currency gained against most major peers as Canadian building permits increased more than forecast in October. A report tomorrow is predicted to show the economy added jobs for a fourth month in November. Canada’s currency fell yesterday to C$1.07 per U.S. dollar as the central bank warned of low inflation, spurring bets it will keep interest rates on hold as the Federal Reserve lets U.S. borrowing costs rise by trimming bond-buying.
“We have come too far, too quickly,” said Dean Popplewell, head analyst at the online currency-trading firm Oanda Corp., by phone from Toronto. “They’re anticipating stronger numbers -- yes, that’s probably a fair comment -- hence why the Canadian weakness certainly ran out of gas.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, rose 0.3% to C$1.0651 per U.S. dollar at 2:25 p.m. in Toronto. Yesterday’s low of C$1.0707 was the weakest since May 2010. One loonie buys 93.89 U.S. cents.
Canada’s benchmark 10-year government bond fell, with yields rising one basis point, or 0.01 percentage point, to 2.66% after touching 2.68%, the highest since Oct. 16. The 1.5% security maturing in June 2023 lost 9 cents to C$90.34.
Futures of crude oil, Canada’s biggest export, rose for a fifth day, gaining 0.3 to $97.53 per barrel in New York after touching $97.99, the highest level since Oct. 29.
A report tomorrow will show Canada added 12,000 jobs in November, according to a Bloomberg survey of 20 economists, compared with 13,200 in October and an average of 12,630 per month this year.
“If you get this great Canadian job data tomorrow, we’re not going to C$1.0750, it’ll be at C$1.0550,” Darcy Browne, managing director of currencies at Canadian Imperial Bank of Commerce’s CIBC World Markets unit, said by phone from Toronto. “So you might as well hold on and wait and see what the data is at this point.”
The value of municipal permits rose 7.4% to C$7.19 billion ($6.75 billion), Statistics Canada said in Ottawa. Economists forecast a 1% gain according to the median of nine responses to a Bloomberg survey.
Policy makers have tightened rules on mortgage lending in recent years amid concerns the nation’s housing market is overvalued and a sharp correction in prices would wreak havoc on consumers carrying record debt loads.