Canadian dollar edges up on firm commodity prices

Thu Jan 3, 2008 4:46pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar ended higher versus the greenback on Thursday due mostly to higher commodity prices, but nagging concerns about the U.S. economy capped the gains.

Canadian bond prices ended mixed ahead of key U.S. payrolls data due on Friday and the first batch of domestic economic reports to be released in 2008.

The Canadian dollar closed at US$1.0092, valuing each U.S. dollar at 99.09 Canadian cents, up from US$1.0072, or 99.28 Canadian cents, at Wednesday's close.

The domestic currency hit a session high of US$1.0129, or 98.73 Canadian cents per U.S. dollar, shortly after oil prices broke through $100 a barrel while gold also hit a record high.

Canada is a major producer and exporter of both oil and gold, and its currency often rises as prices for the two commodities go up.

But pressing concerns about the health of the U.S. economy and what fallout that could have on Canada kept the Canadian dollar's gains in check.

"It's widely accepted that when the U.S. sneezes Canada will catch a cold," said Gareth Sylvester, senior currency strategist at HIFX Plc in San Francisco. "And there hasn't been enough decoupling between the trading patterns to suggest that isn't true moving forward."

Sylvester suggested the market is still trying to look at U.S. data to see how much the U.S. economy may slow and impact Canada.   Continued...