C$ hits 1-year high; focus turns to jobs data

Thu Oct 8, 2009 4:45pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Canada's dollar zoomed to a one-year high against the U.S. currency on Thursday as commodity and equity prices rose on upbeat economic data that lifted optimism for recovery and whetted the market's appetite for risk.

The currency raced as high as C$1.0506 to the U.S. dollar, or 95.18 U.S. cents, its highest level since September 30, 2008. The underlying catalyst on Thursday was Australian employment data that rose past expectations.

"That sentiment was carried through to North America," said Brendan McGrath, senior trader at Custom House.

"It's positive sentiment. Risk is back in the market again today. As a result, commodities are up, equities are up and you can bet when that happens the Canadian dollar will be (up) too."

That news followed the Reserve Bank of Australia's interest-rate increase earlier this week, which made it the first G20 central bank to raise rates following the wave of rate cuts that accompanied the onset of the recession. The market took this as a sign of improved economic conditions, and the move sparked speculation about which central bank would be next in line.

"We obviously don't think that the Bank of Canada is moving on rates any time soon but it does show that central banks are starting to get back into that tightening mode and reaffirms the improved risk appetite," said Shane Enright, executive director, foreign exchange sales at CIBC World Markets.

Helping drive Canada's currency higher was a rise in oil prices above $71 a barrel and soaring gold prices, which hit a record high for a third successive session, climbing above $1,060 an ounce.

The Canadian dollar finished at C$1.0522 to the U.S. dollar, or 95.04 U.S. cents, up from C$1.0624 to the U.S. dollar, or 94.13 U.S. cents, at Wednesday's close.   Continued...

<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal, April 28, 2006.</p>