TORONTO: The Canadian dollar strengthened against its US counterpart for a fourth straight session on Wednesday, testing but failing to push past equal value with the greenback ahead of Friday's domestic employment report.
The currency received a boost as prices for most commodities rose on strong Chinese trade data and on signs that Germany may escape a sharp slowdown.
"You can't help but be impressed by the strength in the Canadian dollar," said Adam Button, a currency analyst at ForexLive in Montreal.
The currency has gained some 2-1/2 cents on the US dollar since late April. It closed the North American session on Wednesday at C$1.0033, or 99.67 US cents, compared with C$1.0044, or 99.56 US cents, on Tuesday.
The currency at one point hit C$1.0017 to the greenback, its strongest level since Feb. 15.
But the rise of the loonie, as Canada's currency is colloquially known, could yet falter, strategists say.
The gain has been tied to the steep rise in global equity markets and signals from central banks that they will keep on setting policy to support growth.
"On the slightest bit of bad news, the Canadian dollar is vulnerable," Button said. "Every day it takes better and better news to maintain this momentum."
Over the longer term, the Canadian dollar is expected to weaken against the greenback in the year ahead, according to a Reuters poll published on Wednesday. Forecasters cited concern about the economy's slow rate of growth compared with that of the United States.
With the April Canadian employment report due out on Friday, Button said he did not expect the loonie to push past equal value with the greenback this week, and said it could even pull back as much as C$1.0130.
The currency had little reaction to Canadian data that showed housing starts slipped in April from March. The number of starts was in line with the median forecast of analysts polled by Reuters.
"It's a generally quiet week until Friday. I think Friday, there's some scope for some volatility in the FX space. But until then, it's probably going to be range-bound," said Mazen Issa, macro strategist at TD Securities.
Friday's employment report is expected to show the Canadian economy added 15,000 jobs in April after a steep decline notched in March, according to a Reuters survey of analysts.
Prices for Canadian government bonds were generally higher across the curve, although rises were limited at the short end.
The two-year bond rose a third of a Canadian cent to yield 0.978 percent, while the benchmark 10-year bond gained 11 Canadian cents to yield 1.812 percent.
Canada's dollar underperformed against the euro and was flat versus the yen, while it traded at its strongest level against the New Zealand dollar since mid-March.
New Zealand's central bank confirmed on Wednesday it was selling its own currency, reflecting concerns that a flood of global money could undermine a budding economic recovery.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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