Canada dollar up on strong data and lofty oil prices

Tue May 20, 2008 9:42am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar was higher against a generally weaker U.S. dollar on Tuesday while lofty oil prices and a stronger-than-expected piece of domestic data also helped beef up the currency's gain.

Domestic bond prices were all higher after data released overnight heightened economic growth concerns.

At 9:20 a.m. (1320 GMT), the Canadian currency was trading at US$1.0091, valuing a U.S. dollar at 99.10 Canadian cents, up from US$1.0002, valuing a U.S. dollar at 99.98 Canadian cents.

During the overnight session the Canadian dollar climbed to US$1.0128, valuing a U.S. dollar at 98.74 Canadian cents, its highest level since March 17.

The Canadian dollar eventually eased off its overnight high but it rebounded slightly after domestic data showed wholesale trade rose 0.6 percent in March, which was better than the 0.4 percent analysts surveyed by Reuters had forecast.

But the bounce was limited as the data also showed real wholesale sales fell by 0.1 percent during the month.

"It is helping as we saw the Canadian dollar rally, but there was no real follow through after the data because real wholesale sales were down 0.1 (percent)," said Matthew Strauss, senior currency strategist at RBC Capital Markets.

"What has been helping the Canadian dollar generally speaking is the broad-based U.S. dollar weakness which saw the U.S. dollar weaken against most of the other currencies."   Continued...