Canadian dollar falls with oil prices, bonds rise

Mon Aug 18, 2008 5:17pm EDT
 
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By John McCrank

TORONTO (Reuters) - The Canadian dollar fell 0.5 percent against the U.S. dollar on Monday, after the commodity-based currency gave up earlier gains as oil prices softened.

Domestic bond prices rose along with the U.S. market, which rallied on fears coming out of the U.S. mortgage sector.

The Canadian dollar closed at C$1.0643 to the U.S. dollar, or 93.96 U.S. cents, down from C$1.0590 to the U.S. dollar, or 94.43 U.S. cents, at Friday's close.

U.S. crude oil prices climbed to over $115 a barrel overnight, helping lift the Canadian dollar as high as C$1.0544 to the U.S. dollar, or 94.84 U.S. cents.

Canada is the largest exporter of oil to the United States oil price moves often influence its currency.

Oil prices changed direction during the North American session as it appeared a tropical storm headed for Florida's west coast would miss key oil operations in the Gulf of Mexico.

The Canadian dollar also reversed its gains and Shane Enright, currency strategist at CIBC World Markets said that could spell more bad news from a technical perspective.

"I think technically you've got room to take this back towards C$1.08 or C$1.09," he said.   Continued...