Canada dollar, commodities lifted by weak U.S. unit

Thu Aug 21, 2008 9:19am EDT
 
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* Canada dollar rises 0.7 pct on U.S. dollar weakness

* Canada inflation rises, but on low side of expectations

* Bonds helped by higher C$ and lower inflation concerns

By John McCrank

TORONTO, Aug 21 (Reuters) - The Canadian dollar rose 0.7 percent against a besieged U.S. dollar on Thursday, as worries over the state of the U.S. financial sector triggered a sell-off in the greenback, and gave a boost to commodity prices.

Bond prices rose on the back of the U.S. financials, mostly ignoring Canadian inflation data, which came in on the low-end of market expectations.

At 8:50 a.m. (1250 GMT), the Canadian dollar was at C$1.0540 to the U.S. dollar, or 94.88 U.S. cents, up from C$1.0612 to the U.S. dollar, or 94.23 U.S. cents, at Wednesday's close.

The currency steadily climbed against its U.S. counterpart from midway through Wednesday's North American session, as the market focused on worries about U.S. mortgage finance giants Fannie Mae FNM.N and Freddie Mac FRE.N. See [ID:nN21288958]

Those concerns grew overnight with a report from the Wall Street Journal that said the U.S. Federal Reserve had investigated investment bank Lehman Brothers LEH.N regarding rumors over its credit line. See [ID:nBNG249402]   Continued...