Loonie rides commodity prices higher

Wed Mar 26, 2008 10:03am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose to its highest level in a week versus the U.S. dollar on Wednesday due to a combination of higher commodities prices and a generally weaker greenback.

Domestic bond prices, with no Canadian economic data to consider until next week, were higher as fresh concerns about the health of the U.S. economy bolstered demand for more secure assets like government debt.

At 9:40 a.m. (1340 GMT), the Canadian unit was at $1.0166 to the U .S. dollar, or 98.37 U.S. cents, up from $1.0173 to the U.S. dollar, or 98.30 U.S. cents, at Tuesday's close.

Earlier, the Canadian dollar rose to $1.0095 to the U.S. dollar, or 99.05 U.S. cents, which marked its highest level since March 19.

The latest boost for the Canadian dollar was being credited to a familiar combination of weak economic data weighing on the greenback and investors opting to put their money into some of the key commodities that Canada produces and exports.

"We're still in an environment where it's bearish for the U.S. dollar," said David Watt, senior currency strategist at RBC Capital Markets. "When you get bearish for the U.S. dollar and you're getting commodities going up that provides a little bit of a lift for the Canadian dollar relative to the U.S. dollar."

Gold prices jumped to a one-week high while the price of oil moved back above $102 a barrel after a strike disrupted operations at a French oil refining hub.

Further moves in the domestic currency are expected to be dictated by factors outside of Canada given the lack of any Canadian data to influence traders.   Continued...

<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal, April 28, 2006. REUTERS/Shaun Best</p>