3 Min Read
* C$ retreats to 99.69 U.S. cents
* Bonds prices soften across curve (Updates with Canadian dollar turning lower)
TORONTO, Jan 4 (Reuters) - The Canadian dollar fell close to a one-week low against the U.S. currency at midday on Tuesday, spurred by a retreat in the price of crude oil.
Canada is a major oil producer, and despite a more than 3 percent pullback in crude prhces to below $89 a barrel, many investors expect the Canadian dollar to trade near par with the U.S. dollar for some time due to optimism about the world economy.
"If we continue to see some decent Canadian economic releases and no pain out of Europe, then the Canadian dollar will appreciate as long as we continue to see stronger oil and commodity prices," said John Curran, senior vice president at CanadianForex, noting the U.S. dollar had perked up.
"Markets are getting back to some sort of normalcy. A few of the other currencies have pulled back...so it makes sense for the Canadian dollar to give up some of the ground it gained."
U.S. factory orders figures for November that showed the largest gain in eight months helped to boost the U.S. currency. [FRX/] [ID:nN03158039]
At 12:37 p.m. (1737 GMT), the currency was at C$1.0031 to the greenback, or 99.69 U.S. cents, down sharply from Friday's finish, when it ended the year at C$0.9946 to the U.S. dollar, or $1.0054.
The Canadian dollar had shot as high as C$0.9889 to the U.S. dollar, or $1.011, on Monday, when Canadian financial markets were closed. This represents a new technical support level for the U.S. currency against the Canadian dollar, said Adam Cole, head of global FX strategy at RBC Capital Markets in London.
Early on Tuesday, the Canadian currency touched as high as C$0.9917 to the U.S. dollar, or $1.0084, its highest level since May 2008. It fell as low as C$1.0035 to the U.S. dollar, or 99.65 U.S. cents, its lowest level since Dec. 29.
North American employment data on Friday will provide the main focus this week, with improvements expected on both sides of the border. U.S. Federal Reserve Chairman Ben Bernanke's congressional testimony that day will also be closely watched. [ID:nN31145126] [ID:nN31145126]
Canadian bond prices were slightly weaker as the day's economic data suggested a brighter economic outlook.
The two-year bond CA2YT=RR was down 1 Canadian cent to yield 1.672 percent, while the 10-year bond CA10YT=RR dropped 25 Canadian cents to yield 3.147 percent. (Reporting by Ka Yan Ng and Claire Sibonney; editing by Peter Galloway)