Canada dollar hit by weak commodities, strong US$

Thu Mar 20, 2008 6:32pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar fell nearly 1 percent against a broadly stronger U.S. dollar on Thursday, heading into the Easter holiday weekend, as influential commodity prices continued to slide.

Domestic bond prices were mixed as hedge funds were forced to deleverage themselves to some extent due to tight credit conditions.

The Canadian dollar closed at C$1.0234 to the U.S. dollar, or 97.71 U.S. cents, down from C$1.0152 to the U.S. dollar, or 98.50 U.S. cents, at Wednesday's close.

For the week, the currency ended down 3.6 percent.

The slide in the Canadian dollar came along with a drop in commodity prices, many of which recently hit record highs.

Canada is a major producer of commodities such as crude oil and gold, and those prices can have a major influence on the currency.

The Reuters-Jefferies CRB index .CRB, which tracks the prices of 19 commodity futures, was down almost 10 percent on the week, the biggest drop on the index since at least 1956, said Camilla Sutton, currency strategist at Scotia Capital.

"Because of the violence of the move, it does seem like there are active players really taking off long positions very aggressively," Sutton said.   Continued...

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