Canadian dollar gets boost from higher oil prices

Wed Sep 10, 2008 10:02am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose slightly versus the U.S. dollar on Wednesday given a slight rebound in commodity prices and overseas stock market losses that were much lighter than in North America.

Domestic bond prices, with no key domestic economic data to influence a move, were flat and clinging to slim gains on the short end of the curve following a quarterly loss reported by U.S. investment bank Lehman Brothers.

At 8:15 a.m., the Canadian unit was at C$1.0703 to the U.S. dollar, or 93.43 U.S. cents, up from C$1.0706 to the U.S. dollar, or 93.41 U.S. cents, at Tuesday's close.

The Canadian currency was supported by a rise in oil prices after a meeting of the Organization of the Petroleum Exporting Countries agreed to an unexpected production cut.

Since Canada is a key oil exporter, its currency is often influenced by price moves in the commodity.

Another boost for the Canadian dollar were losses on equity markets in Asia and Europe that were much less than the losses on North American markets from Tuesday.

During the overnight session the Canadian dollar recouped a chunk of its recent losses and rallied as high as C$1.0658 to the U.S. dollar, or 93.83 U.S. cents.

"The strength came from two aspects, the most important being a slight rebound in commodity prices," said Matthew Strauss, senior currency strategist at RBC Capital Markets.   Continued...