C$ at strongest in a week as US$ retreats

Fri Oct 30, 2015 4:55pm EDT
 
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar strengthened sharply against a broadly weaker U.S. currency on Friday, touching its strongest level in a week as traders rebalanced their books at the end of the fiscal year for Canadian banks.

The loonie, as Canada's currency is colloquially known, has gained steadily over the last three days in part on crude oil price gains. It added 0.7 percent for the week and 2 percent over the course of October.

"There are plenty of dollars moving around in different directions," Brad Schruder, a director of foreign exchange sales at BMO Capital Markets, said of Friday's trading.

"At the same time, I think the big dollar in and of itself is about to go through a period of weakness, so I would suspect that the Canadian dollar continues to do a little bit better over the next few sessions," he said.

The Canadian dollar CAD=D4 settled at C$1.3075 to the greenback, or 76.48 U.S. cents, compared with Thursday's close of C$1.3167, or 75.95 U.S. cents.

It moved in a wide range, as weak as C$1.3193 and as strong as C$1.3056, its strongest point since Oct. 23.

Investors are torn between those who expect the U.S. Federal Reserve to start raising interest rates later this year and those who feel economic weakness will force them to delay the first hike until 2016.

"The wider theme I would say is towards a stronger U.S. dollar on the heels of the Fed," said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank. "It's very much a wait-and-see proposition at this stage."   Continued...

 
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.  REUTERS/Mark Blinch