Canadian dollar rises with oil price, bonds mixed

Thu Jul 10, 2008 4:50pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar closed at its highest level in more than two weeks on Thursday, as a jump in oil prices helped spark some interest in the commodity linked currency ahead of Friday's domestic jobs report.

Bond prices, with no domestic data to influence a move, ended mixed in light trading.

The Canadian dollar closed at C$1.0091 to the U.S. dollar, or 99.10 U.S. cents, up from C$1.0111 to the U.S. dollar, or 98.90 U.S. cents, at Wednesday's close. It was its highest close since June 25.

The currency spent the session in a fairly tight range of C$1.0137 to C$1.0076 as traders avoided major bets before seeing how the job market fared in June.

The moderate rally was mainly due to a $5 jump in the price of U.S. crude oil to over $141 a barrel, said Matthew Strauss, senior currency strategist at RBC Capital Markets.

"That clearly helped the Canadian dollar," he said, adding that a rally on the Toronto Stock Exchange, which had opened up in negative territory, also helped the currency advance.

Looking ahead to Friday's employment figures, the last major piece of data before the Bank of Canada's scheduled rate decision on Tuesday, analysts expect an increase of 10,000 jobs in June with an unemployment rate of 6.1 percent, according to a Reuters survey.

"If we end up getting a very strong report, although I don't think it will change the Bank of Canada's view, it could increase talk about the possibility of a hike next week and that in turn could be positive for the Canadian dollar," said Strauss.   Continued...