C$ strengthens, but lower oil prices seen weighing

Fri Oct 24, 2014 9:54am EDT
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar was marginally stronger against its U.S. counterpart on Friday, but was seen at risk of weakening due to lower oil prices and worries about the results of European bank stress tests that are due on the weekend [MKTS/GLOB].

Brent crude fell below $86 a barrel on news of strong supply from Middle East OPEC producers. Markets were also hit by news of the first confirmed case of Ebola in New York.

The Canadian currency had strengthened on Wednesday after a Bank of Canada statement dropped a reference to neutrality on interest rates. But investors were unable to get more clarity from the central bank because a scheduled press conference was canceled after a gunman shot dead a soldier at the National War Memorial in Ottawa and gunfire erupted inside parliament.

Bank of Canada Governor Stephen Poloz is now set to testify at the Senate banking committee on Oct. 29. His testimony had been scheduled for Thursday but was canceled due to the shooting incidents in Ottawa.

"Dollar-Canada has moved down to the low C$1.12s but not below C$1.12, and it is still trading the range and the range is still fairly well defined at C$1.12 to C$1.13 - the short-term goal posts as it were," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

At 9:10 a.m. the Canadian dollar CAD=D4 was at C$1.1204 to the U.S. dollar, or 89.25 U.S. cents, stronger than Thursday's North American session close of C$1.1233 to the greenback, or 89.02 U.S. cents.

Spitz said he didn't expect the loonie's strength to last.

"Crude is turned down, as is natural gas, 1 to 1.5 percent and that price action is likely to weigh on a currency like Canada, so we expect (the Canadian dollar to weaken) a bit off the C$1.12s back into the middle of the range, C$1.1220 to C$1.1240," he said.   Continued...

A Royal Canadian Mint employee holds freshly pressed Canadian one dollar coins, also know as loonies, in Winnipeg November 14, 2007. Picture taken November 14. REUTERS/Fred Greenslade