(Bloomberg) -- Canada’s dollar rose to the highest in almost 11 weeks against its U.S. counterpart amid indications the global slowdown may be moderating.
The loonie, as the currency is known, strengthened as U.S. Federal Reserve Chairman Ben S. Bernanke said in Atlanta that there are signs the “sharp decline” in the U.S. economy is slowing. New York-based Goldman Sachs Group Inc. reported higher-than-forecast profit yesterday.
“There seems to be cautious optimism that maybe the worst is over,” said Paul Ferley, assistant chief economist in Toronto at Royal Bank of Canada, the country’s biggest lender.
Canada’s currency appreciated 0.4 percent to C$1.215 per U.S. dollar at 4:53 p.m. in Toronto, from C$1.2199 yesterday. It touched C$1.2063, the highest level since Jan. 28. One Canadian dollar buys 82.31 U.S. cents.
The loonie briefly pared gains as U.S. stocks and crude oil declined after a government report showed U.S. retail sales unexpectedly decreased in March. The Standard & Poor’s 500 Index slid 2 percent, and crude for May delivery fell as much as 2.4 percent. The Canadian currency tends to track fluctuations in stocks and commodity prices.
Canadian government bonds rose. The yield on the two-year note declined one basis point, or 0.01 percentage point, to 1.09 percent. The price of the 1.25 percent security due in June 2011 gained 2 cents to C$100.34.
The loonie will weaken to C$1.26 against the U.S. dollar this quarter before rebounding to C$1.16 by the end of 2010, according to the median forecast in a Bloomberg News survey of 37 analysts and economists.
“Yesterday’s daily close below support at C$1.2268 indicates that a shift in sentiment is under way” for the U.S. dollar-Canadian dollar exchange rate, said George Davis, chief technical analyst in Toronto at RBC Capital Markets Inc., a unit of Canada’s biggest bank by assets. Support is a level where sell orders may be clustered.
Davis lowered his three-month trading range to C$1.16 to C$1.26, from C$1.20 to C$1.30.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
