Loonie edges higher as global stocks, oil firm

Mon Jan 18, 2010 9:31am EST
 
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar edged higher against the U.S. currency on Monday morning as firmer prices of key Canadian exports oil and gold and firmness in global equity markets boosted the currency.

Raw material prices advanced on hopes for strong Chinese demand and on a weaker dollar, lifting commodity shares and global equities, while the euro hit a four-month low against a broadly firmer pound. U.S. markets were closed on Monday for Martin Luther King Jr. Day.

"Generally the market is starting the week on a positive footing so equities are stronger and oil is stronger. There's a U.S. holiday so flows are fairly light so far," said Camilla Sutton, currency strategist at Scotia Capital.

The price of oil climbed above $78 a barrel after falling for five days, while bullion prices were also firmer.

At 9:09 a.m. (1409 GMT), the Canadian dollar was at C$1.0258 to the U.S. dollar, or 97.48 U.S. cents, up from Friday's finish at C$1.0294 to the U.S. dollar, or 97.14 U.S. cents.

Sutton also said the Canadian currency was supported by domestic data that showed foreigners invested heavily in Canadian bonds in November as credit markets recovered and the Canadian dollar rose, pushing total purchases of Canadian securities to C$10.54 billion in the month.

Still, Canadian bond prices were virtually unchanged across the curve as the market could not look to U.S. markets for any significant guidance, said Sutton.

(Editing by James Dalgleish)