C$ firms as gold helps reverse early loss

Mon Dec 14, 2009 4:55pm EST
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TORONTO (Reuters) - Canada's currency edged higher on Monday, clawing back from an early drop to its lowest level in three sessions, boosted by a rising gold price and some stability in oil after recent declines.

The turnaround in the Canadian currency was also helped along by a weaker U.S. dollar as Abu Dhabi's decision to throw neighboring emirate Dubai a $10 billion lifeline to repay debts slowed safe-haven buying of the greenback.

That all helped the domestic currency rally as high as C$1.0568 to the U.S. dollar, or 94.63 U.S. cents.

Earlier it had fallen to C$1.0662 to the U.S. dollar, or 93.79 U.S. cents, which added to a sharp slide on Friday and marked its lowest level since December 9.

"It just felt to me like some of the move from Friday was taken back," said Steve Butler, director of foreign exchange trading at Scotia Capital. "We're now at a bit of a crossroads on whether or not the U.S. dollar continues to strengthen."

The Canadian unit closed at C$1.0593 to the U.S. dollar, or 94.40 U.S. cents, up from C$1.0599 to the U.S. dollar, or 94.35 U.S. cents, at Friday's close.

Gold prices were up 0.7 percent, while oil prices steadied after earlier falling to their lowest level since October 5.

Both oil and gold are key Canadian exports whose prices often influence the country's currency.