Canadian dollar rises as oil pierces $83 a barrel

Wed Jan 6, 2010 5:08pm EST
 
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar climbed against the U.S. dollar on Wednesday, boosted by a weaker greenback and by rising crude oil prices, which punched through the $83 a barrel mark.

The U.S. dollar fell against the euro after minutes from the U.S. Federal Reserve's latest policy meeting highlighted the possibility of more stimulus measures for the economy.

Oil prices climbed for a 10th straight day to above $83 a barrel, boosted in part on expectations that frigid weather will boost demand for heating fuel.

As well, ongoing Canadian dollar sentiment is helping to push the dollar/Canada toward a low of C$1.207, said Camilla Sutton, currency strategist at Scotia Capital.

"Breaking that (level) would obviously indicate new downward momentum on dollar/Canada," she said. "I suspect we'll see a test of that in the next couple of sessions."

The Canadian dollar finished at C$1.0325 to the U.S. dollar, or 96.85 U.S. cents, up from C$1.0390 to the U.S. dollar, or 96.25 U.S. cents, at Tuesday's close. Earlier on Wednesday, it shot as high as C$1.0313 to the U.S. dollar.

The Canadian dollar has been at 2-1/2-month highs this week as generally firmer equity markets at the start of the year and a steady oil price above $80 a barrel have combined to support the currency.

According to a Reuters poll of market analysts released on Wednesday, the Canadian dollar could hit parity with the U.S. currency this year, but it is likely to weaken gradually overall.   Continued...

 
<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal in this April 28, 2006 file photo. REUTERS/Shaun Best</p>