Peso, loonie pace world currency (Dollar stronger than Euro) (Texas Corridor)

Update: Crude oil surged to the highest level in 17 months after March data showing employers in the U.S., the world’s biggest oil consumer, added the most jobs in three years, bolstering optimism that fuel demand will climb. Oil increased as much as 1.2 percent after the Labor Department reported that payrolls rose by 162,000 last month. Oil also climbed before a report today that may show service industries in the U.S. expanded in March at the fastest pace since 2007, based on a Bloomberg survey of economists.

Crude oil for May delivery rose as much as $1.02, or 1.2 percent, to $85.89 a barrel in electronic trading on the New York Mercantile Exchange, the highest intraday price since Oct. 9, 2008. The contract was at $85.38 at 1:04 p.m. London time.  

“Traders were waiting for the March payroll report to come out to see if the trend in the U.S. is still positive,” said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo. “It has raised hopes of the need for energy in the market.”

Mexico’s peso and Canada’s dollar are outperforming all other major currencies for the first time since at least 1998 and probably will keep rallying as the U.S. recovery lifts the rest of the world’s largest trading bloc, according to Bloomberg News.

The currencies gained 5.9 percent and 3.7 percent against the greenback in 2010’s opening months, rising in tandem with the Intercontinental Exchange Inc.’s Dollar Index for a second straight quarter for the first time in 11 years. Hedge funds and large speculators are the most bullish on the peso and Canada’s loonie since at least April 2008, before the credit crisis swamped Lehman Brothers Holdings Inc. five months later, driving both down as much as 31 percent.

As U.S. stimulus efforts totaling as much as $8.2 trillion lift demand for Mexican engine parts from Alfa SAB in Monterrey and Canadian oil from Suncor Energy Inc. in Alberta, the strength of all three countries’ currencies is demonstrating the North American Free Trade Agreement’s benefits. By contrast, ballooning deficits in Greece, Spain and Portugal weighed on the currency of the world’s biggest monetary union as the euro fell 5.7 percent versus the dollar in the first quarter.

“With U.S. growth resumption, we should see channels of support for the Canadian dollar and Mexican peso assert themselves,” said Sacha Tihanyi, a strategist in Toronto at Bank of Nova Scotia, one of the first quarter’s three most- accurate forecasters on Canada’s currency in a Bloomberg survey.

“Trade unions do have an implicit advantage: Each constituent nation can still tailor monetary policy to their specific situation, given that their economic structures may be quite different, whereas a currency-union is bound by a constant policy,” Tihanyi said.

The peso and the loonie topped all 13 other most traded currencies tracked by Bloomberg in January, February and March. The duo and the Dollar Index gained an average of 4.5 percent in the first quarter, the most since 1977. Last year, the greenback fell 14.9 percent in nine months against the euro, yen, pound, Swiss franc, loonie and Swedish krona, the Dollar Index’s fastest decline since 1987.

Mexico’s currency will rise another 2.4 percent to 12 per dollar by Dec. 31, from 12.2914 today, according to Royal Bank of Scotland Group Plc, the first quarter’s most accurate peso forecaster along with Royal Bank of Canada, which sees it strengthening 4.6 percent to 11.75 in a year.

The loonie, nicknamed for the aquatic bird on Canada’s C$1 coin, will gain 1.1 percent to reach parity with the U.S. dollar for the first time since July 2008, and then appreciate 3 Canadian cents more by Dec. 31, according to Standard Bank and Bank of Nova Scotia, two of the first quarter’s three top forecasters on the currency. It climbed as much as 0.6 percent to C$1.0052 today.