Canadian dollar up for 2nd day, bonds fall; eyes on GDP

Tue Mar 30, 2010 4:54pm EDT
 
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By Ka Yan Ng

TORONTO (Reuters) - The Canadian dollar hit a one-week high against the U.S. dollar on Tuesday, helped by a positive tone in oil and stock markets, but stayed rigidly within recent ranges ahead of monthly economic growth data.

The Canadian dollar, along with its commodity-linked currency cousins, the Australian and New Zealand dollars, were strong performers overnight on the back of firmer base metal prices and a slight advance in the price of oil, a major Canadian export.

The Canadian dollar ended at C$1.0195 to the U.S. dollar, or 98.09 U.S. cents, up from C$1.0207 to the U.S. dollar, or 97.97 U.S. cents, at Monday's close.

It reached a session high at C$1.0157 to the U.S. dollar, or 98.45 U.S. cents, but handed back some gains ahead of Wednesday's seasonally adjusted gross domestic product figures for January.

Economists expect a 0.5 percent gain in GDP, which would add weight to the view that the Canadian economy is in recovery.

"The big news for Canada this week is tomorrow's GDP report," said Doug Porter, deputy chief economist at BMO Capital Markets.

"It would actually be the fifth month in a row of solid gains. With revisions, we actually ended last year at quite a nice clip, and it looks like, if anything, the economy gathered steam at the start of the year."

The data could help push the Canadian dollar higher and toward testing the near-parity levels against the greenback it visited about two weeks ago. Domestic factors, while strong, have largely taken a backseat to global risk sentiment in recent sessions.   Continued...