Canadian dollar's upward march stalls as market eyes rates

Thu Oct 15, 2009 4:46pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Canada's currency fell against the U.S. dollar on Thursday, backing away from a near 15-month high as the market paused ahead of the Bank of Canada's interest rate announcement next week.

During the overnight session, the Canadian currency rose to C$1.0207 to the U.S. dollar, or 97.97 U.S. cents, which was its highest level since July 2008.

That rally built on momentum from Wednesday's North American session after upbeat U.S. corporate results boosted investor optimism about a global recovery and their appetite for risk.

But the market slammed into reverse as the day progressed and focus shifted to next Tuesday's Bank of Canada policy announcement, which investors will examine for clues about the timing of the next interest rate hike.

"I think a lot of people have essentially taken profit realizing that's a big risk on the horizon," said Camilla Sutton, currency strategist at Scotia Capital.

"I think it's a bit of give-back after a very substantial move."

The Canadian dollar finished at C$1.0345 to the U.S. dollar, or 96.67 U.S. cents, down from C$1.0259 to the U.S. dollar, or 97.48 U.S. cents, at Wednesday's close.

The weakness follows a mostly uninterrupted rise in the currency this month that took it within striking distance of rising above the U.S. dollar for the first time since July 2008.   Continued...

<p>Canadian loonies, one dollar coins, are displayed in this posed photograph in Toronto, October 10, 2008. REUTERS/Mark Blinch</p>