Dollar boosted by oil prices, bonds mixed

Mon Apr 14, 2008 5:10pm EDT
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By John McCrank

TORONTO (Reuters) - The dollar rose against the U.S. dollar on Monday as the price of oil, a key Canadian export, closed at a record high.

Canadian bond prices retreated from earlier highs to finish mixed in response to rebounding equities markets.

The Canadian dollar closed at C$1.0196 to the U.S. dollar, or 98.08 U.S. cents, up from C$1.0234 to the U.S. dollar, or 97.71 U.S. cents, at Friday's close.

U.S. crude oil futures settled at $111.76 a barrel, boosted by a weaker greenback and supply disruptions ahead of the U.S. summer driving season.

Strength in the Canadian dollar was tempered, however, by a Bank of Canada business survey that showed that Canadian businesses are gloomier about the near-term future due to a slowing economy and tighter credit conditions.

The survey supports the view that more interest rate cuts are needed to keep the economy out of recession as it gears down.

The Bank of Canada has cut its key lending rate by one percentage point since December to 3.5 percent. A Reuters survey showed that the majority of Canada's primary securities dealers expect the bank to shave a half-point off the overnight rate for a second straight time next week.

It survey also showed that businesses are concerned about the rising costs of energy and food, a topic that will be in the spotlight on Thursday, when Canadian inflation data for March is released.   Continued...

<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal, April 28, 2006. REUTERS/Shaun Best</p>