The Canadian dollar reached its highest level in seven weeks against its U.S. counterpart as appetite for risk assets outweighed the deteriorating economic outlook in the commodity-exporting nation.
The currency strengthened as a report showed a 0.2 percent February gain in new home prices, up from a 0.1 percent rise the month before. Slowing growth is prompting economists to cut forecasts on two-year government bonds the most in more than a year as they push out projections for Bank of Canada interest- rate increases, according to a Bloomberg survey. U.S. stocks rose for a fourth day as U.S. jobless claims dropped more than forecast. The currencies of Canada’s commodity-exporting peers, Australia and New Zealand, rose as lending in China expanded more than analysts projected.
“We have a lot of bad news baked into Canada, but we don’t have a lot of good news, so I think we’ve already seen the bad- news story play out in terms of what’s been priced in,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS), by phone from Toronto. “There are a lot of things that should end up supporting the Canadian dollar as we get into next year and even late this year, that’s everything from a housing market that doesn’t collapse as some people feel to oil pricing that’s already turned much more favorably for the Canadian economy.”
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