Dollar rises with oil, market optimism

Fri Apr 18, 2008 6:02pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar rose against the U.S. dollar on Friday, fueled by record high oil prices and improved market sentiment.

Domestic bond prices ended mostly lower, as a rally in the stock markets lessened the safe-haven appeal of government debt.

The Canadian currency closed at C$1.0049 to the U.S. dollar, or 99.51 U.S. cents, up from C$1.0122 to the U.S. dollar, or 98.79 U.S. cents, at Thursday's close.

For the week, the loonie gained 1.8 percent against the greenback.

Robust prices for oil, a key Canadian export, along with the rallying equities markets were the main reasons for the move, said Matthew Strauss, senior currency strategist at RBC Capital Markets.

U.S. crude oil prices reached a record high of $117 a barrel on supply concerns ahead of the peak summer driving season. Much of the Canadian dollar's 60 percent rise since 2002 has been linked to robust oil prices.

Stock prices rallied, despite the fact that Citigroup Inc. C.N, the largest U.S. bank, posted billions of dollars in writedowns, as investors bet the worst was over for the credit crunch.

The improved market sentiment gave a boost to the greenback, and the Canadian dollar was taken along for the ride, said Strauss.   Continued...