Dollar rises on "buy North America" bid

Wed Sep 10, 2008 4:40pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar rose slightly against a generally stronger U.S. dollar on Wednesday as investors focused on weakening growth overseas and bought North American currencies.

Domestic bond prices fell as investors moved out of bonds and into the more lucrative stock market.

The Canadian dollar ended the North American session at C$1.0697 to the U.S. dollar, or 93.48 U.S. cents, up slightly from C$1.0706 to the U.S. dollar, or 93.41 U.S. cents, at Tuesday's close.

The currency spent the day in a range of C$1.0658 and C$1.0744. It was given a boost early in the session from firm oil prices, but gave up most of the gains as the price of U.S. crude oil turned negative.

"It's (the Canadian dollar) behaving remarkably well considering the continued sell-off in commodities," said David Bradley, director of Foreign Exchange at Scotia Capital.

Canada is a major exporter of many key commodities, like oil and gold, both of which are well off recent all-time highs.

Bradley said some Canada merger and acquisition-related flows may be preventing the Canadian dollar from weakening.

A stronger U.S. dollar was also seen helping the Canadian dollar, as investors focused on a "buy North America" mode, he said.   Continued...