Dollar climbs to highest level since October

Mon Jul 27, 2009 5:07pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar rose to its highest level versus the U.S. dollar in nearly 10 months on Monday as investor appetite for riskier assets boosted the currency.

The Canadian dollar rose as high as C$1.0778 to the U.S. dollar, or 92.78 U.S. cents, its highest level since early October.

It backed off slightly to finish at C$1.0811 to the U.S. dollar, or 92.50 U.S. cents, up from C$1.0829 to the U.S. dollar, or 92.34 U.S. cents, at Friday's close.

"Overall, sentiment is still fairly positive with respect to equities and commodities," said George Davis, chief technical strategist at RBC Capital Markets.

A lackluster performance on U.S. stock markets prevented the Canadian currency from staying under the C$1.0800 level, Davis said. Stock market direction is often seen as a barometer of investor risk tolerance.

Toronto's main stock index closed higher as financials rose on economic recovery hopes, while U.S. stocks managed to eke out small gains late in the session.

The rise in the Canadian dollar on Monday followed its 3-percent climb last week and came alongside rallies in commodity-linked currencies such as the Australian dollar.

Also supporting the currency was the price of oil, a key Canadian export, which rose to settle above $68 a barrel.   Continued...