Canadian dollar higher vs U.S. dollar, other commodity currencies even as oil falls

Tue Feb 9, 2016 5:14pm EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar firmed against a broadly weaker U.S. counterpart on Tuesday even as oil prices tumbled, although it lost ground against safe-haven currencies including the Japanese yen and the Swiss franc amid turmoil in equities worldwide.

The Canadian currency did better than a string of other commodity-linked currencies as oil teetered close to a 12-1/2-year low hit last month and financial turbulence fed doubts about the Federal Reserve's forecast of four U.S. interest rate hikes this year.

"The Canadian dollar is standing there in splendid isolation relative to that group" of commodity currencies that include the Russian rouble, Mexican peso and Norwegian crown, said Shaun Osborne, chief currency strategist at Scotiabank.

"It may well be that people were just getting too negative on Canada," he said.

The Canadian dollar CAD=D4 settled at C$1.3879 to the greenback, or 72.05 U.S. cents, stronger than the Bank of Canada's official Monday close of C$1.3934, or 71.77 U.S. cents.

U.S. crude CLc1 prices settled down 5.9 percent at $27.94 a barrel while Brent LCOc1 lost 6.6 percent to $30.72 on gloomy U.S. and global demand outlooks.

Osborne said decent Canadian economic data since early January, including on wholesale trade, retail sales and manufacturing, have helped reverse loonie weakness that saw the currency approach C$1.47 versus the greenback in mid-January.

Losses in Asian stock markets sent investors scurrying for safe havens, while a drop in bank shares kept European shares under pressure. Yields on longer-term Japanese bonds fell below zero for the first time.   Continued...

A Canadian dollar coin, commonly called a "Loonie" and an American dollar bill are seen in this staged photo in Toronto, March 17, 2010.  REUTERS/Mark Blinch