Canadian dollar rises as investors square books

Mon Dec 17, 2007 10:10am EST
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By John McCrank

TORONTO (Reuters) - The Canadian dollar rose against the U.S. dollar on Monday in a move that was magnified by light trading as investors squared their year-end balance sheets.

Canadian bond prices rose as investors sought the safety of government debt amid declining equity markets.

At 9:54 a.m. EST, the Canadian dollar was at C$1.0090 to the U.S. dollar, or 99.11 U.S. cents, up from C$1.0170 to the U.S. dollar, or 98.33 U.S. cents, on Friday.

The Canadian dollar fell as low as 97.76 U.S. cents in the overnight session before reversing direction.

"At the overnight lows, some buyers emerged in London, and given the thin market conditions, it led to a reversal in the overnight selloff, and that carried into the morning session," said David Watt, senior currency strategist at RBC Capital Markets.

The move was based on technical levels and not due to fundamentals, said Watt. The price of oil was lower, which would normally be a negative for the Canadian dollar, as Canada is a major oil producer and exporter. Domestic data was not favorable for the Canadian dollar either, Watt said.

The data showed that foreign divestment of Canadian securities hit a record high in October as some Canadian portfolio shares were withdrawn from markets after being taken over by foreign interests, Statistics Canada said.

Nonresidents lowered their Canadian holdings by C$24.32 billion, selling a record C$23.44 billion worth of stocks.   Continued...