Oil, gold help loonie rally to highest since October 22

Wed Nov 11, 2009 9:32am EST
 
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose to its highest level in nearly three weeks on Wednesday given the mix of broad U.S. dollar weakness and stronger prices for key Canadian exports like oil and gold.

Canada's currency rose as high as C$1.0433 to the U.S. dollar, or 95.85 U.S. cents, its highest level since October 22, before backing off slightly.

Helping power the latest rally were gold prices that hit record highs near $1,120 an ounce and oil prices that firmed above $79 a barrel.

Both are key Canadian exports and their prices often influence the direction of the Canadian dollar.

Compounding the gain was a greenback that extended a recent decline given concerns about the U.S. economy and expectations interest rates will remain low.

"It's a combination of all of those factors," said Adam Cole, global head of FX strategy at RBC Capital Markets in London. "But the liquidity will be pretty challenged today so it could get choppy indeed."

Canada is observing Remembrance Day and the United States is observing Veterans Day on Wednesday.

At 9:00 a.m. (1400 GMT), the Canadian unit was at C$1.0452 to the U.S. dollar, or 95.68 U.S. cents, up from C$1.0501 to the U.S. dollar, or 95.23 U.S. cents, at Tuesday's close.

The Canadian bond market is closed on Wednesday for Remembrance Day.

(Editing by Jeffrey Hodgson)