Canadian dollar rallies to nearly 8-week high, gains pared as oil drops
By Fergal Smith
TORONTO (Reuters) - The Canadian dollar rallied to a nearly eight-week high against a weaker U.S. counterpart on Thursday, although gains were pared as crude oil prices reversed lower.
The currency CAD= has rallied 7 percent since Jan. 20, when it hit its weakest level since 2003 at C$1.4689, helped by expectations that the Bank of Canada will not cut rates in the near term.
A more dovish European Central Bank, the recovery in oil prices and stabilization in stocks have given the rally added traction, according to Michael Goshko, corporate risk manager at Western Union Business Solutions, while U.S. dollar weakness has taken over as the major driver over the past two days.
"It has nothing to do with what's going on internally," said Goshko.
The U.S. dollar .DXY extended its plunge against major currencies amid doubts the U.S. Federal Reserve will be able to hike interest rates this year.
The collapse through support at C$1.3800 was a gift for Canadian corporate U.S. dollar buyers, according to Goshko. "Our customers backed up the truck in record volumes," he said.
Oil prices reversed earlier gains amid skepticism that a supply cut deal will be reached. U.S. crude CLc1 prices settled at $31.72 a barrel, down 1.73 percent.
The Canadian dollar CAD=D4 ended at C$1.3745 to the greenback, or 72.75 U.S. cents, stronger than Wednesday's official close of C$1.3773, or 72.61 U.S. cents. Continued...