C$ ends higher but well off 14-month high

Tue Oct 13, 2009 4:45pm EDT
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By Frank Pingue

TORONTO (Reuters) - Canada's dollar hit a 14-month high within striking distance of parity with a weakening U.S. dollar on Tuesday, but as the session progressed it relinquished some of the gains as the market's appetite for risk waned.

The Canadian currency charged to C$1.0265 to the U.S. dollar, or 97.42 U.S. cents, its loftiest level since August 2008, sparking talk that it could soon move above the greenback for the first time since July 2008.

But the currency went on to slide as low as C$1.0375 to the U.S. dollar, or 96.39 U.S. cents, in a North American session where investors appeared to lose some interest in snapping up risky assets such as the Canadian dollar.

It hit a session low after Canadian Prime Minister Stephen Harper said too rapid a rise in the currency could damage the country's economic recovery.

"Some of the move was profit-taking and some of it was the comments that were attributed to Stephen Harper," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

"Setting aside the price action today there seems to be a relatively widespread belief that the U.S. dollar is going to continue to weaken and that will contribute to a move to parity in dollar/Canada."

The early strength in the currency that led it to the 14-month high was attributed to lofty commodity prices and recent upbeat Canadian economic data that ignited talk about whether the Bank of Canada will raise interest rates sooner than expected.

That sentiment all but vanished as the session wore on.   Continued...