Canadian Dollar Strengthens as Trade Surplus Rises in June

By Cordell Eddings

Aug. 12 (Bloomberg) -- Canada's dollar rose from the lowest in almost a year after a report showed the nation's trade surplus increased during June.

The Canadian dollar strengthened versus 13 of the 16 most- actively traded currencies and gained for the first time in nine days against its U.S. counterpart.

``We've had a string of disappointing reports, so markets may be taking some hope from the improvement in the trade balance,'' said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. ``There has been a modest weakening of the U.S. dollar, and that is providing some support for the Canadian dollar as well.''

The currency increased 0.4 percent to C$1.0647 per U.S. dollar at 8:59 a.m. in Toronto, from C$1.0692 yesterday. It was the biggest one-day gain since July 21. Earlier it touched C$1.0728, the weakest since Aug. 17, 2007. One Canadian dollar buys 93.93 U.S. cents.

The surplus widened to C$5.76 billion ($5.38 billion) from a revised C$5.22 billion during May, Statistics Canada said in Ottawa.

``There is a sense the U.S. dollar may have gotten ahead of itself, given its violent rally over the last couple of weeks,'' said Sal Guatieri, a senior economist at the Bank of Montreal in Toronto. ``We are seeing the U.S. dollar coming back some, which is giving the Canadian dollar a boost.

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net