Canada dollar rides liquidity plan to higher close

Wed Dec 12, 2007 5:11pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose versus the U.S. currency on Wednesday despite a turnaround in equity markets that ate away at early gains made after a coordinated move by major central banks to help resolve liquidity issues.

Canadian bond prices ended lower across the curve due to a combination of the central bank actions and Canadian trade data that came in ahead of expectations.

The Canadian dollar closed at 98.70 U.S. cents, valuing a U.S. dollar at C$1.0132, up from Tuesday's session close of 98.58 U.S. cents, or C$1.0144.

A sharp turnaround in North American equity markets, which stumbled after posting big gains early in the session, took its toll on the Canadian dollar and yanked it from a session high of 99.45 U.S. cents, or C$1.0055.

Support for the Canadian currency came early in the session as major central banks, including the Bank of Canada, came together to ease the tight conditions in the money market.

"The short-term implications of the establishment of the liquidity facility were positive for the commodity currencies ... including the Canadian dollar," said David Powell, currency analyst at IDEAglobal in New York.

"But equities have taken a U-turn and ... that has seen the Canadian dollar and the rest of the commodity currencies give back those gains."

Both the Toronto Stock Exchange and Dow Jones industrial average rallied more than 200 points during the session before closing with gains of 85.67 points and 41.13 points respectively.   Continued...