C$ touches highest since Nov, helped by oil rally

Mon May 4, 2009 4:33pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar shot to its highest level in nearly six months on Monday, boosted by a jump in equity markets and oil prices as hopes increased that the global economy may be on the road to stabilizing.

The Canadian dollar rallied as high as C$1.1725 to the U.S. dollar, or 85.29 U.S. cents, its highest level since November 10, as crude, a key Canadian export, also pushed above $54 a barrel, its highest settlement of the year.

"Slowly but surely things are looking better and better and I think there's a little bit of hope in the market that maybe the second half of 2009 is not going to be as bad as everybody feared," said Steve Butler, director of foreign exchange trading at Scotia Capital.

"As long as equities keep climbing the market feels safer and safer every day."

The Canadian dollar finished at C$1.1735 to the U.S. dollar, or 85.22 U.S. cents, up from C$1.1859 to the U.S. dollar, or 84.32 U.S. cents, at Friday's close.

The currency traded in tandem with equity and commodity markets, in line with a recent theme of risk appetite that has seen investors willing to buy riskier assets on the hope that the global economy is getting healthier.

The Toronto Stock Exchange's S&P/TSX composite index rose more than 3 percent on Monday as resource-issues were lifted by commodity prices. Financials gained on hope that stress tests on the biggest U.S. banks will provide some clues on the depth of the problems in the U.S. financials sector.

Global equities rallied on bank hopes and global data that showed improvement in manufacturing in Europe, China and India, and on positive signs on U.S. home sales and construction.   Continued...