3 Min Read
* Canadian dollar rallies despite lower oil prices
* No Canadian data due out to influence sentiment
* Bond market closed for Remembrance Day
By Frank Pingue
TORONTO, Nov 11 (Reuters) - The Canadian dollar was higher versus the U.S. dollar on Tuesday morning but the move was exaggerated in thin trading with many market players sitting out because of holidays in Canada and the United States.
Bond markets, which finished flat to lower on Monday, were closed in Canada for Remembrance Day and in the United States for Veterans Day.
At 9:30 a.m. (1430 GMT), the Canadian unit was at C$1.1930 to the U.S. dollar, or 83.82 U.S. cents, up from C$1.1965 to the U.S. dollar, or 83.58 U.S. cents, at Monday's close.
Fundamentals that often direct the Canadian dollar seemed to suggest the currency should be lower since oil prices were down more than 4 percent and overseas stock markets were all lower as economic gloom deepened.
Also, the excitement about a Chinese economic stimulus plan that offered support to the Canadian dollar in the previous session, since it would likely mean more demand for Canada's commodities, looks to have been short-lived.
Yet the Canadian dollar -- which has moved comfortably off the more than four-year low below 77 U.S. cents that it fell to in October -- was slightly higher early on Tuesday.
"I can only say in all honestly that it's probably down to the fact that markets are incredibly thin today and small flows are having a disproportionate affect because markets are so thin," said Adam Cole, global head of currency strategy at RBC Capital Markets in London.
"Things will all remain very quiet until tomorrow."
When a full slate of traders returns they could send the Canadian dollar back down since a slide in global stock markets refocused attention on the prospect of widespread global recession, which would likely to cut deep into demand for oil, which is a key export of Canada. (Editing by Peter Galloway)