2013.05.0701:42:33UTC+00Canadian Dollar advances against most counterparts as building permits rise

The Canadian dollar rallied versus almost all of its most-traded peers after a government report displayed March building permits increased more than predicted.

The currency bolster versus counterparts from commodity exporting nations such as Australia and New Zealand as the value of permits issued by municipalities surged 8.6 percent to C$6.45 billion ($6.40 billion), following a revised 1.5 percent increase in February, Statistics Canada stated in Ottawa. The increase outstripped all 12 responses in a Bloomberg economist survey with a median estimate of a 1.3 percent rise. Canada displayed its first international merchandise trade surplus in a year in March, and February gross domestic product growth was 0.3 percent compared to a media forecast of 0.2 percent.

“Some of the data is coming out a little bit better than expected,” Matthew Perrier, director of foreign exchange at Bank of Montreal, said by phone from Toronto. “Canada’s doing a little bit better -- when it weakened off in the middle part of last month, it didn’t weaken off quite as far as it did in March. The weakness is a little shallower with each move so that seems to be trending in Canada’s favor.”

The loonie, as the Canadian dollar's nickname, advance 0.1 percent to C$1.0068 per U.S. dollar at 5:00 p.m. in Toronto. One loonie purchases 99.33 U.S. cents. The Canadian dollar has increased in the last two months.

Bonds, Oil

Canada’s 10-year government bonds decline, with yields jumping three basis points, or 0.03 percentage point, to 1.80 percent. The 1.5 percent security maturing in June 2023 dropped 28 cents to C$97.27.

Futures on crude oil, Canada’s largest export, improved with 0.2 percent to $95.79 per barrel. The Standard & Poor’s 500 Index of U.S. stocks produced a 0.2 percent increase.

The cost to insure versus sharp declines in the Canadian dollar against its U.S. counterpart reached their peak in more than a week. The three-month so-called 25-delta risk reversal rate reached 1.1275 percent, its highest level since April 25. Risk reversals measure the premium on options contracts to sell Canadian dollars against purchasing U.S. contracts that do the opposite

The increase in building permits was led by a 19 percent gain in non-residential construction while residential permits owned 1.7 percent, with a 4.7 percent drop in single family housing permits, Statistics Canada said. Finance minister Jim Flaherty tightened mortgage rules last summer to deflate a possible housing bubble.

‘Soft Numbers’

“We saw increased building permits in March, but we still have weakness on the housing side,” said Dean Popplewell, head analyst at the online currency trading firm Oanda Corp., by phone from Toronto. “These soft numbers are not really too much of a surprise given the change in the mortgage rules and obviously economic moderation that we’re seeing globally and obviously slowing home prices as well. Put that all together and there’s nothing to get too excited about.”

The canadian currency is approaching a technical measure that suggests it will soon drop in worth. The 14-day relative strength index versus the U.S. dollar was 63.7 percent, at almost the 70 percent level that signals it will fall.

Canada’s Ivey purchasing managers’ index was 52.2 in April on a seasonally adjusted basis, following a March reading of 61.6, based in the statement on the website of Western University’s business school.

Readings of more than 50 indicate purchasing by governments and companies advanced.

The U.S. unemployment rate touched 7.5 percent in April, its worst level in four years, Labor Department figures showed last week.

The loonie has up 1.4 percent in the last month versus nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index. The Australian dollar has fallen 1.4 percent while the greenback has boosted 0.2 percent.