Canadian dollar rally fades on weaker oil prices

Thu Jan 19, 2012 5:21pm EST
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By Jon Cook

TORONTO (Reuters) - The Canadian dollar closed little changed against its U.S. counterpart on Thursday after briefly touching a six-week high, as a dip in oil prices offset the impact of encouraging Canadian manufacturing data and easing fears about Europe's debt crisis.

Canada's currency was unable to match gains made by the euro and global equities markets, which rose after solid European bond auctions increased hopes the crisis there is fading, while strong U.S. jobs data bolstered Wall Street.

The Canadian dollar gave back its early gains as U.S. crude futures fell, pressured by continuing weak demand and technical resistance. Canada is a major exporter of oil.

"We've run into U.S.-dollar buyers just because we hit the strong-end of the range and energy prices are down," said Shane Enright, executive director of foreign exchange sales at CIBC World Markets.

Weaker gold prices also hurt. Gold fell as tame U.S. inflation data prompted bullion investors to take profits after a three-day rally pushed prices to their highest levels since mid-December.

The Canadian dollar finished at C$1.0114 to the U.S. dollar, or 98.87 U.S. cents, down slightly from Wednesday's finish at C$1.0112 to the U.S. dollar, or 98.89 U.S. cents.

The currency hit a six-week high at C$1.0071 to the U.S. dollar, or 99.29 U.S. cents, after Canadian manufacturing data showed sales rebounded in November to their highest level since October 2008.

Data showing the number of Americans filing for new jobless benefits dropped to a near four-year low last week also boosted investor sentiment.   Continued...