Canadian dollar rises with commodities, bonds up

Tue Jan 8, 2008 5:34pm EST
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By John McCrank

TORONTO (Reuters) - Lofty oil and gold prices helped the commodity-linked Canadian dollar rise against the U.S. dollar on Tuesday, but a lack of Canadian economic data limited gains.

Canadian bond prices rallied on a safe haven bid as North American equity markets turned negative.

The Canadian dollar ended the North American session at 99.56 U.S. cents, valuing a U.S. dollar at C$1.0044, up from 99.44 U.S. cents, or C$1.0056, at Monday's close.

The currency passed the parity mark with the U.S. dollar shortly before midday, rising to a high of US$1.0034, making a U.S. dollar worth 99.66 Canadian cents. But it was unable to maintain the momentum as oil prices slid back from session highs.

U.S. crude oil CLc1 closed up more than 1 percent, at above $96 a barrel on fears of violence in Nigeria and speculation of declining U.S. crude stocks. Meanwhile, spot gold XAU= hit a record high above $880 an ounce, supported by a weaker greenback and higher oil prices.

Canada is a major producer and exporter of both oil and gold, and its currency has followed their price increases higher over the past few years.

But as fears of a recession in the United States grow, the foreign exchange market is waiting for more economic data to dictate direction, said David Watt, senior currency strategist at RBC Capital Markets.

"People are just waiting around for fresh data to give it direction, and until then, we are just going to continue to go on a day-to-day basis with no clear direction in currencies."   Continued...