Loonie pierces parity for second day but falls back

Wed Apr 7, 2010 6:49pm EDT
 
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar pushed through parity against the greenback for a second day on Wednesday, nearing a 21-month high, but then fell back sharply as oil prices fell and risk appetite dried up.

The Canadian dollar touched a low of C$1.0058 to the U.S. dollar, or 99.42 U.S. cents, its descent deepening as oil prices retreated after six sessions of gains and as euro zone worries persisted.

Canadian building permits data for February came in weaker than the market had forecast, also pressuring the currency. Building permits, a barometer of future construction activity, slid 0.5 percent in the month to C$5.7 billion versus market expectations of a 2 percent gain.

However, the Ivey purchasing activity index for March jumped more than expected.

Early in the day the currency drove as high as C$0.9977, or US$1.0023, its highest intraday level since July 15, 2008.

"Overnight, the Canadian dollar thrust its way through parity a few times but ultimately it's softened up and is just below the threshold for now," said Eric Lascelles, chief economics and rates strategist at TD Securities.

"It seems to be a day more broadly in which risk has been taken off the table around the world."

The Canadian dollar finished at C$1.0051 to the U.S. dollar, or 99.49 U.S. cents, down from Tuesday's close of C$1.0012 to the U.S. dollar, or 99.88 U.S. cents.   Continued...