Canadian dollar rattled again by oil-price fall

Wed Aug 6, 2008 4:51pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar fell more than half a cent to a fresh 11-month low versus the U.S. dollar on Wednesday as the downdraft in commodity prices continued to rattle the currency.

Canadian bond prices, with no key economic data to spark a move, finished mostly flat across the curve as dealers bided their time until key Canadian jobs figures are released on Friday.

The Canadian dollar closed at C$1.0477 to the U.S. dollar, or 95.45 U.S. cents, down from C$1.0419 to the U.S. dollar, or 95.98 U.S. cents, at Tuesday's close.

As has been the case in recent sessions, Canada's role as a key exporter of oil weighed on its currency since the price of oil fell to a three-month low less than a month after it vaulted to a record above $147 a barrel.

"It hasn't been the same degree that other commodity-based currencies have fallen, but normally if commodity prices fall we tend to get dragged along," said Sal Guatieri, senior economist at BMO Capital Markets.

While commodity-linked currencies have been under pressure in recent weeks, the Canadian dollar has managed to outperform other commodity-based currencies, most notably the Australian and New Zealand dollars.

Still, the Canadian currency is down 2 percent this week after two straight losing weeks, and the main culprits have been weak commodity prices and concerns about global growth.

Data released midway through the first half of the session showed Canadian purchasing activity rose more than expected in July but the figures also signaled weaker employment may be on the horizon.   Continued...