Loonie rises with oil

Mon Apr 21, 2008 9:39am EDT
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By John McCrank

TORONTO (Reuters) - Record high oil prices helped the Canadian dollar rise as the U.S. dollar weakened on Monday, while domestic bond prices retreated along with the larger U.S. market.

At 9:20 a.m., the Canadian dollar was at C$1.0036 to the U.S. dollar, or 99.64 U.S. cents, up from C$1.0049 to the U.S. dollar, or 99.51 U.S. cents, at Friday's close.

"The (U.S.) dollar seemed to sell off after we got the Bank of America BAC.N results," said Adam Cole, head currency strategist at RBC Capital Markets in London.

The No. 2 U.S. bank saw its income fall 77 percent to $1.21 billion, hurt by writedowns and rising credit losses.

That sent the greenback lower as investors fretted that the fallout from the global credit crisis may not be over.

However, the commodity-linked Canadian dollar got a boost from record oil prices.

U.S. crude oil prices reached a record peak above $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.

Investors will now be looking forward to Tuesday's Bank of Canada interest rate announcement.   Continued...