The Canadian dollar strengthened to the highest level against its U.S. counterpart since November 2007 as commodities including crude oil, the nation’s biggest export, surged amid optimism global economic growth is accelerating.
The currency gained for the third straight week as oil exceeded $112 U.S. a barrel on concern Libyan output won’t rebound when fighting ends in that divided nation. Gold surged to a record. The Bank of Canada is expected to keep its target interest rate at 1% when policy makers meet next week.
The loonie appreciated 0.8% to 95.54 cents per U.S. dollar Friday in Toronto, from 96.32 cents on April 1. It touched 95.27 cents yesterday, the strongest level since Nov. 15, 2007. One Canadian dollar buys $1.0467.
The currency has strengthened 9.3% since June, and is approaching the strongest levels since it was allowed to float in 1950. The currency touched 90.58 cents on Nov. 7, 2007, as the collapse of the U.S. subprime-mortgage market disrupted financial markets and weakened the U.S. dollar.
Government bonds fell for a third week. The yield on the benchmark 10-year security climbed 8 basis points, or 0.08 percentage point, to 3.44%. Two-year note yields rose seven basis points to 1.90%, also the third consecutive weekly increase.
Crude oil for May delivery increased 4.5% last week to $112.79 U.S. a barrel in New York, the highest level since September 2008. The Reuters/Jefferies CRB Index of raw materials climbed 2.2% in its third consecutive weekly gain, and gold advanced 3.2%. Raw materials including oil and gold account for about half of Canada’s export revenue.
The Standard & Poor’s/TSX Composite Index has climbed 5.7% this year as the Canadian economy expands and the U.S. Federal Reserve encourages investors to seek higher yielding assets elsewhere by keeping borrowing rates at a record low range of zero to 0.25%.
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