Dollar hits 7-month high, set for best month of 2012

Fri Apr 27, 2012 5:15pm EDT
 
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By Jon Cook

TORONTO (Reuters) - Canada's dollar hit a seven-month high against its U.S. counterpart on Friday and was on track for its best month this year after the greenback slid broadly on signs of flagging U.S. growth.

First-quarter U.S. economic growth cooled as businesses cut back on investment and restocked shelves at a slower pace.

The GDP data came on the heels of Thursday's disappointing U.S. jobless claims report, raising expectations that the Fed could launch another round of monetary easing, which would likely be negative for the greenback.

"A generally weak U.S. dollar on the back of the GDP report leaves the door open to further dovishness from the Fed," said Camilla Sutton, chief currency strategist at Scotiabank. "The Canadian dollar has rallied a fair bit over the last few sessions."

The latest sign of investor bullishness on the Canadian currency appeared in data from the Commodity Futures Trading Commission. It showed net long positions in the Canadian dollar rose to 44,224 contracts in the latest week, the highest level since the end of 2005, as currency speculators cut U.S. dollar positions.

The Canadian dollar finished at C$0.9810 versus the U.S. dollar, or $1.0194, up from Thursday's finish at C$0.9840 against the greenback, or $1.0163. It touched a session high at C$0.98, its strongest level since September 19.

With one session left in April, the currency was up 1.7 percent and headed for its best monthly gain this year. It rose 1.1 percent on the week, its best showing since early March.

The Canadian dollar shrugged off euro zone debt worries after Spain's credit rating suffered another downgrade and data on Friday revealed nearly 25 percent of the debt-ravaged nation's workforce is unemployed.   Continued...