Canadian dollar steady near par versus U.S dollar

Wed May 7, 2008 9:37am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar was steady around parity versus the U.S. dollar on Wednesday as oil stuck close to a record high and the market opted to reacquaint itself with North American currencies.

Domestic bond prices, with no key data to influence a move, were mostly flat across the curve as dealers awaited the key Canadian jobs report due later this week.

At 9:15 a.m., the Canadian unit was at C$1.0027 to the U.S. dollar, or 99.73 U.S. cents, up from C$1.0029 to the U.S. dollar, or 99.71 U.S. cents, at Tuesday's close.

Helping keep the Canadian dollar within striking distance of parity versus the greenback, which it topped on Tuesday for the first time in two weeks, was lofty oil prices and a sense that the worst is over for the U.S. economy.

Oil prices, which often dictate direction for Canada's commodity-linked currency, remained in sight of a record high above $122 a barrel hit during Tuesday's session.

And a sense that economic conditions in the United States, Canada's biggest trading partner, are starting to improve made North American currencies more attractive.

"Oil prices are probably a modest support for the Canadian dollar, but I think generally it's a reflection of we're sort of back to the buy North America attitude," said Shaun Osborne, chief currency strategist at TD Securities.

"We've kind of been primed for a little bit more spillover from the U.S. slowdown into the Canadian economy over the last little while, and if the (U.S.) economy really is through the worst then investors are generally taking the view that the outlook for Canada can't be quite as bad."   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>