Canadian dollar gets boost from equities, bonds up

Fri Feb 1, 2008 5:03pm EST
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By John McCrank

TORONTO (Reuters) - The Canadian dollar rose 1 percent against the U.S. dollar on Friday, as equity markets made healthy gains, putting a positive spin on the global growth outlook and giving support to commodity-based currencies.

Bond prices rose across the curve after a weak U.S. jobs report supported the idea of more interest rate cuts by the U.S. Federal Reserve.

The Canadian currency closed at US$1.0060, valuing a U.S. dollar at 99.40 Canadian cents, according to the Bank of Canada, up from C$1.0038 to the U.S. dollar, or 99.62 U.S. cents, at Thursday's close.

The currency ended the week up 1.3 percent against the greenback.

"I think the story right now is about global growth, and equities markets being up helps that story," said Camilla Sutton, currency analyst at Scotia Capital.

The markets have been very volatile as of late, and currency traders have been looking to the stock markets as a barometer on the prospects for global growth.

When those prospects rise, so too does the outlook for the commodities that countries like Canada, Australia and New Zealand produce. The currencies of all three countries were up about 1 percent on the day.

Microsoft Corp's (MSFT.O: Quote) $44.6 billion dollar bid for Yahoo Inc YHOO.O helped lift North American stock markets.   Continued...