C$ ends just below 99 U.S. cents, bonds sag

Wed Mar 17, 2010 4:36pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - The Canadian dollar closed just below 99 U.S. cents on Wednesday, its highest level in almost 20 months, as it moved tantalizingly close to being on a one-for-one footing with the U.S. dollar.

The currency got support from firm commodity prices and a renewed pledge by the U.S. Federal Reserve to keep interest rates low for an extended period, as well as a bigger than expected jump in Canadian wholesale trade data. During the day it rose as high as C$1.0071 to the U.S. dollar, or 99.30 U.S. cents, its highest level since July 2008.

It closed at C$1.0103 to the U.S. dollar, or 98.98 U.S. cents, up from Tuesday's close of C$1.0140 to the U.S. dollar, or 98.62 U.S. cents.

"The Canadian dollar continues to show strength, quite an astonishing push...There is undeniably a great deal of momentum," said Eric Lascelles, chief economics and rates strategist

"Parity is very much in the market's sights."

The Canadian dollar also benefited from a softer tone to the U.S. dollar, Lascelles said. The greenback fell against higher-yielding currencies as risk assets rallied, including stock markets and oil, which rose above $82 a barrel.

The Canadian dollar has closed higher in 13 of the last 14 sessions, gaining every day but one during this month so far.

"The risk is that there's going to be a bit of a correction, but there's no real incentive because the overall trend is still higher," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange, a commercial foreign exchange dealing firm.   Continued...