C$ ticks up, has first weekly gain in 5 weeks

Fri Jul 17, 2009 5:25pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar climbed a bit against the greenback in muted trade on Friday, logging its first weekly gain in five weeks as optimism about economic recovery spurred investors to greater risk.

"The story is that the currency has had one of its best weeks in some time, hoisted by improved risk appetite and rising energy prices," said Sal Guatieri, senior economist at BMO Capital Markets.

Strength on North American stock markets through the week set a positive tone for the currency, inspiring the market to move away from the safe-haven U.S. dollar. Rising stocks are typically seen as a sign investors are willing to take on greater risk.

"Risk appetite was whetted by the string of better than expected earnings reports from the U.S., especially in the banking sector," Guatieri said.

Another factor helping the Canadian dollar on Friday was a 2.5 percent runup in the price oil to $63.56 a barrel, boosted in part by reassuring U.S. housing data.

The Canadian dollar barely budged after data showed the annual inflation rate turned negative in June for the first time since November 1994. The figures were right in line with forecasts in a Reuters survey of analysts.

"It was really quiet today because the inflation numbers came out right as expected, across the board. That for the most part set the tone for a fairly uneventful trading day," said George Davis, chief technical strategist at RBC Capital Markets.

The Canadian dollar finished at C$1.1161 to the U.S. dollar, or 89.60 U.S. cents, up from C$1.1172 to the U.S. dollar, or 89.51 U.S. cents, at Thursday's close.   Continued...