C$ firms as China export hopes boost commodities

Wed Jun 9, 2010 4:58pm EDT
 
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By Claire Sibonney and Jeffrey Hodgson

TORONTO (Reuters) - Canada's dollar strengthened against the U.S. currency on Wednesday, fueled by news of stronger than expected Chinese exports, which raised hopes for global growth and boosted resource prices.

"It's all been a slight return to risk appetite, that's pretty much the biggest factor driving everything and comes back to ... Chinese exports," said Jon Gencher, a director of foreign exchange sales at BMO Capital Markets.

"Oil is up, commodities are doing okay. So, all in all, it's risk-on. But with that said the market is still going to remain very cautious."

As Canada is a major exporter of oil and other commodities, improving prospects for global growth often boost the currency.

The Canadian dollar closed at C$1.0443 to the U.S. dollar, or 95.76 U.S. cents, up from Tuesday's North American finish of C$1.0485 to the U.S. dollar, or 95.37 U.S. cents.

The currency firmed as high as C$1.0365 to the U.S. dollar, or 96.48 U.S. cents, its strongest level since June 4, but pared gains as North America stock markets dropped into negative territory late in the session.

Chinese exports in May grew about 50 percent from a year earlier, a senior government official told an internal investor conference on Wednesday, sources at the meeting told Reuters. The data is due out on Thursday.

"The expectation was for 30 percent and that generally is giving a bid to riskier assets and riskier currencies, and cyclical currencies," said Adam Cole, head currency strategist at RBC Capital Markets in London.   Continued...