2013.04.0504:37:27UTC+00Canadian Dollar touches 6-week high before March jobs reports

The Canadian dollar reached to a six-week high against its U.S. peer before employment data tomorrow predict to display job boost last month in the U.S. and Canada.

The currency rose to the best level since 2008 versus the yen after Bank of Japan Governor Haruhiko Kuroda took methods that would depreciate the value of the currency in his war versus deflation. Canada produced 6,500 jobs in March from 50,700 the previous month, while the U.S. boosted 190,000 from 236,000 the month before. U.S. weekly jobless claims surpass forecasts last week, fueling assumptions that the government figures may trail projections as well.

“We see a little bit of further weakness in some oil prices and gold, a little bit of further weakness in Toronto equities and the currency has actually strengthened a little bit,” said Doug Porter, chief economist at Bank of Montreal by phone from Toronto. “We’ve had the trauma in Cyprus and we have the Bank of Japan trying to actively weaken the yen, and in a world such as that, the Canadian dollar looks like a relatively safe harbor.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, bolster 0.2 percent to C$1.0127 per U.S. dollar at 5 p.m. in Toronto, achieving the best level since Feb. 19. One loonie buys 98.75 U.S. cents. The currency acquired 3.7 percent to 95.12 yen, hitting the most since Oct. 6, 2008.

Yen Day

“This whole day has been about selling yen, and now you’ve seen a lot of the other currencies start to play a part in the move,” Matthew Perrier, managing director of foreign exchange at Bank of Montreal, said by phone from Toronto. “It’s selling of yen across the board on the back of the aggressive quantitative easing measures that the BOJ delivered.”

Canada’s standard 10-year government bonds progress, kicking yields down four basis points, or 0.04 percent, to 1.79 percent. The 1.5 percent note maturing in June 2023 gained 33 cents to C$97.32.

Crude oil, Canada’s biggest export, decline 1.2 percent to $93.36 per barrel in New York, after touching its weakest level since March 22. The Standard & Poor’s Index of 500 U.S. stocks advanced 0.4 percent.

The loonie surged versus the yen after the Bank of Japan (8301) doubled its monthly bond buys to 7.5 trillion yen ($77.8 billion) of bonds a month and double the monetary base, which includes in Kuroda’s first policy meeting as governor today.

Market Shift

“That upward momentum in the CAD/yen cross may have some more legs moving forward, given that the BOJ is sounding even more dovish than people assumed and will likely continue to be very dovish in the months ahead,” Mazen Issa, Canada macro strategist at Toronto-Dominion Bank’s TD Securities, said by phone from Toronto. “Everyone’s just turning their attention towards external events and we’re looking for any sort of domestic catalyst to provide some direction on the Canadian dollar and that’s likely to come from the employment tomorrow.”

Canada’s jobless rate is predicted to remain at 7 percent, the weakest point since December 2008.

“Positions are being pared back ahead of the event risk tomorrow, it’s going to be a very quiet, rangy day for the Canadian dollar,” said Blake Jespersen, managing director of foreign exchange at Bank of Montreal, by phone from Toronto. “In Canada, we think it could disappoint.”

The amount to guarantee versus drops in the loonie surged after hitting the bottom state in 10 weeks April 1. The three- month so-called 25-delta risk reversal rate advance to 0.93 percent from 0.9 percent at the start of the week. Risk reversals measure the premium on options contracts to sell Canadian dollars against purchasing U.S.

The Canadian dollar has acquired 1.8 percent in the last month versus nine other developed-nation currencies tracked by the Bloomberg Correlation Weighted Index. The loonie’s advances has only been surpass by the currency of its fellow commodity- exporting nation, the Australian dollar, which boosted 2.1 percent.