Canada dollar closes above parity with US$

Thu Dec 20, 2007 4:33pm EST
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By John McCrank

TORONTO Dec 20 (Reuters) - The Canadian dollar ended the North American session above parity with the U.S. dollar on Thursday as investors tied up loose ends before the holidays.

Canadian bond prices fell in response to a late rally in equities markets.

The Canadian dollar closed at US$1.0001, valuing each U.S. dollar at 99.99 Canadian cents, up from 99.67 U.S. cents, or C$1.0033 to the U.S. dollar, at Wednesday's close.

The currency touched a high of US$1.0046 after a positive year-end flow came in at around 6:30 a.m. (1130 GMT).

"In many ways, 2007 has been the year of the loonie (the nickname of the Canadian dollar coin), and it looks like it wants to finish the year in fine style," said Doug Porter, deputy chief economist at BMO Capital Markets.

The Canadian dollar reached parity with the U.S. dollar for the first time in 31 years in September on the back of robust commodities prices, a strong domestic economy and a weakening greenback.

It continued its run to a modern-day high in November, topping US$1.10 on Nov. 7, before quickly reversing its path, and dropping more than 10 percent in less than a month.

"The currency did have a significant correction from early November to early December and it may have weakened a bit too far on some of the cross rates," Porter said.   Continued...