Canadian dollar rises with equities

Wed Jan 23, 2008 5:32pm EST
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By John McCrank

TORONTO (Reuters) - The Canadian dollar climbed against the U.S. dollar on Wednesday, in a day of whippy trading that saw North American equity markets comeback from steep losses, boosting sentiment for the commodities-based currency.

Domestic bond prices fell as investors reacted to the equities rebound.

The Canadian currency closed at C$1.0236 to the U.S. dollar, or 97.69 U.S. cents, up from C$1.0281 to the U.S. dollar, or 97.27 U.S. cents, at Tuesday's close.

The currency spent most of the session lower against the greenback, as North American stock markets suffered steep losses early on due to fears of a U.S. recession.

But an end-of-session turn around in equities gave the Canadian dollar some traction.

The Toronto Stock Exchange erased a 400 point loss as financials rallied amid talk of a bailout for U.S. bond insurers.

Stock markets have been viewed as a barometer of the economy, and the fears that a possible U.S. recession could slow the global economy and clip commodity prices have hurt the Canadian dollar.

Canada is a major producer and exporter of many key commodities, such as oil, base metals, and timber.   Continued...

<p>Newly pressed Canadian one dollar coins, also know as loonies, at the Royal Canadian Mint in Winnipeg on November 14, 2007. REUTERS/Fred Greenslade</p>