Canadian dollar weakens, paring recent gains, as crude oil prices fall

Thu Mar 10, 2016 5:34pm EST
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar fell against its U.S. counterpart on Thursday as lower oil prices weighed on the commodity-related currency amid broad market volatility a day after it hit a nearly four-month high.

The currency fell against a broadly weaker greenback as prices for oil, a major Canadian export, slid from a three-month high on doubts that producing countries could reach agreement to limit supply. [O/R]

The loonie, as Canada's currency is colloquially known, had touched its strongest since Nov. 12 at C$1.3230 on Wednesday after the Bank of Canada held its policy interest rate steady at 0.50 percent and refrained from action to erode the currency's recent sharp gains.

"Yesterday's move was overextended," said Stuart Rotman, a foreign exchange risk manager at Velocity Trade.

"It was somewhat bizarre that the Canadian dollar would move that much stronger on really no news," he added.

U.S. crude CLc1 prices settled at $37.84 a barrel, down 1.18 percent, although paring earlier losses in volatile trading. [O/R]

Wall Street reversed course and slipped into the red after European Central Bank President Mario Draghi signaled an end to further rate cuts. Earlier in the session, the ECB had unveiled a raft of measures to stimulate growth.

The Canadian dollar CAD=D4 ended at C$1.3346 to the greenback, or 74.93 U.S. cents, weaker than Wednesday's close of C$1.3250, or 75.47 U.S. cents.   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