Canadian dollar climbs with oil prices, bonds fall

Tue May 6, 2008 5:41pm EDT
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By John McCrank

TORONTO (Reuters) - The commodity-linked Canadian dollar climbed nearly 1 percent against the U.S. dollar on Tuesday, boosted by record high oil prices.

Canadian bond prices fell as investors shifted assets into equities, which were led higher by energy stocks.

The Canadian dollar closed at C$1.0029 to the U.S. dollar, or 99.71 U.S. cents, up from C$1.0135 to the U.S. dollar, or 98.67 U.S. cents, at Monday's close.

The currency briefly rose above parity with the greenback for the first time in two weeks, hitting US$1.0001, making a greenback worth 99.99 Canadian cents.

Driving the increase was a surge in the price of oil to a record $122.73 on supply worries ahead of the U.S. summer driving season.

Canada is a major producer of oil and its currency is often influenced by moves in its price.

"Canada is outperforming all the majors (currencies)," said Camilla Sutton, currency strategist at Scotia Capital.

"The commodity currencies are generally doing well today, but I would suspect there is probably a flow in there too, just because we are outperforming to such an extent."   Continued...

<p>A worker inspects a freshly pressed Canadian one dollar coin at the Royal Canadian Mint in Winnipeg on November 14, 2007. REUTERS/Fred Greenslade</p>