Canada dollar rebounds to close above parity

Wed Feb 13, 2008 4:53pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose against the U.S. dollar on Wednesday and closed above parity for the first time this week as data soothed concerns about a recession in the United States, but the currency spent the day in a narrow range.

Domestic bond prices finished mostly flat as many investors stuck close to the sidelines given the lack of any key data to lure them out of their positions.

The Canadian dollar closed at US$1.0030, valuing a U.S. dollar at 99.70 Canadian cents, up from 99.90 U.S. cents, valuing a greenback at C$1.0010, at Tuesday's close.

The currency bounced around in a tight range given the support of commodity prices and higher equity markets, and the weight of nagging global economic concerns.

"It's a correlation argument between rising equities and stable commodities set against the backdrop of global economic cycle uncertainty," said Jack Spitz, director of foreign exchange at National Bank Financial.

"And when you throw that all into the mix and stir it all up, it seems to be net neutral for the Canadian dollar."

An unexpected rise in U.S. retail sales helped lift the Canadian dollar to an early session high of US$1.0035 as it offered hope that the economy of Canada's biggest trading partner could steer clear of a recession.

But the domestic currency reversed the gains and fell as low as 99.86 U.S. cents before clawing back in the last half of the session to finish just shy of its session high.   Continued...

<p>A worker inspects a freshly pressed Canadian one dollar coin at the Royal Canadian Mint in Winnipeg on November 14, 2007. REUTERS/Fred Greenslade</p>