Canadian dollar rises slightly on higher oil price

Mon May 5, 2008 8:23am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose against the U.S. dollar on Monday as oil prices firmed, but remained in a tight range ahead of key domestic data due later in the week.

Domestic bond prices were a touch higher as nagging fears about a U.S. economic slowdown and Microsoft Corp's (MSFT.O: Quote) decision to drop its bid for Yahoo Inc (YHOO.O: Quote) lured investors into more secure assets like government debt.

At 8:00 a.m. EST, the Canadian unit was at C$1.0164 to the U.S. dollar, or 98.39 U.S. cents, up from C$1.0193 to the U.S. dollar, or 98.11 U.S. cents, at Friday's close.

Driving the commodity-linked currency's early gain was a $1 rise in oil prices to more than $117 a barrel and high gold prices. Oil and gold are major Canadian exports and the currency is often influenced by their price movements.

With no data due in Canada, investors will focus on Bank of Canada Deputy Governor John Murray's presentation to the Statistics Canada Socio-economic Conference.

The presentation isn't expected to offer any clues on the bank's interest rate outlook or any new economic projections.

"I don't think the comments from Deputy Governor Murray would have a major impact on the currency market because he is more talking about the link of the Canadian dollar and the benign inflation environment in Canada," said Matthew Strauss, senior currency strategist at RBC Capital Markets.

"Data due at the end of the week are obviously important for Canada and until then we'll very much take our cue from U.S. dollar moves, equity markets and commodity markets."   Continued...