Dollar ends higher ahead of jobs data

Thu Feb 5, 2009 4:44pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar escaped a choppy session with a higher close versus the U.S. dollar on Thursday, getting a boost from commodity prices, while traders squared positions ahead of Friday's key jobs data.

Higher prices for gold and oil, major Canadian exports, were a main driver behind the gain in the currency and helped reverse an early session drop.

"We had a rally in commodity prices and so that certainly helped ... that was probably the primary driver of the firmer tone in the Canadian dollar," said Charmaine Buskas, senior economics strategist TD Securities.

Canada's currency closed at C$1.2310 to the U.S. dollar, or 81.23 U.S. cents, up slightly from Wednesday's close of C$1.2320 to the U.S. dollar, or 81.17 U.S. cents.

It rallied as high as C$1.2228 to the U.S. dollar, or 81.78 U.S. cents, in the afternoon. That was 1 percent above its North American session low of C$1.2356 to the U.S. dollar, or 80.93 U.S. cents.

Early weakness in the Canadian currency followed a fresh wave of concern about the European economy that gave a boost to the U.S. dollar as traders sought a safe haven play.

But the Canadian currency clawed back as soft jobs data out of the United States persuaded some traders to lighten up on long U.S. dollar positions.

One currency expert said some of the Canadian dollar's recent strength can also be attributed to some merger-related interest and growth forecasts from the Bank of Canada that were less bearish than many had expected.   Continued...