Dollar gets boost from oil, bonds fall

Wed May 28, 2008 5:04pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar ended its four-day losing skid to end higher against its U.S. counterpart on Wednesday, as oil prices rebounded, giving a boost to the commodity-linked currency.

Domestic bond prices fell along with the larger U.S. market as there was no Canadian data to influence direction.

The Canadian dollar closed at US$1.0102, valuing a U.S. dollar at 98.99 Canadian cents, up from US$1.0067, valuing a U.S. dollar at 99.33 Canadian cents, at Tuesday's close.

"The big positive for the currency, today at least, has been a bit of a rebound in energy prices again after a couple of soft sessions," said Shane Enright, currency strategist at CIBC World Markets.

U.S. crude CLc1 bounced from a low of just below $126 a barrel to a high of $131.58, settling up $2.18, or 1.69 percent, at $131.03, fueled by worries over Nigerian production. See <ID:nN28442911>

A lack of domestic data so far this week has limited moves by the Canadian currency, but things pick up on Thursday with balance of payments for the first quarter. That will be followed on Friday by reports on industrial product prices and raw materials prices for April, and gross domestic product data for March and the first quarter.

"Our GDP numbers on Friday will be the interesting thing," said Enright.

"We are looking for 0.2 percent on the quarter, but there is certainly an outside chance you get a negative quarter of growth there. And, if we did see that, that would probably take a little bit of the steam out of a potential Canada rally."   Continued...