* C$ ends down at C$0.9979 vs US$, or $1.0021
* Bonds prices edge up across the curve
By Jon Cook
TORONTO, March 28 (Reuters) - Canada’s resource-heavy dollar slid back toward parity with the U.S. currency on Wednesday as oil prices sank and unexpectedly weak U.S. data hinted that the American economic recovery may be less robust than anticipated.
Oil prices fell as U.S. crude inventories spiked and as prospects grew that the United States and some European nations might tap strategic reserves. U.S. futures retreated, down 2.2 percent near $105 a barrel.
A drop in gold and copper prices also helped weaken the Canadian dollar, which at one point fell back to exactly one-for-one footing with the greenback. The Canadian dollar also lost ground against the euro, but outperformed other commodity-linked currencies, namely the Australian and New Zealand dollars.
“We’ve been stuck in this range for a month and a bit, and we’re testing the top end of it,” said David Bradley, a director of foreign exchange trading at Scotia Capital.
The Canadian dollar recovered somewhat by the end of the North American session, closing at C $0.9979 v ersus the U.S. dollar, or $1 .0021, weaker than Tuesday’s close at C$0.9949 versus the greenback, or $1.0051.
“Canada is very comfortable between C$0.9850 and C$1.0050 (and) we’re right in the middle of that right now,” said Shane Enright, executive director of foreign exchange trading at CIBC World Markets.
In the wake of dovish comments from U.S. Federal Reserve Chairman Ben Bernanke earlier this week, more attention was focused on Wednesday’s U.S. data.
February U.S. durable goods orders came in below expectations and a gauge of future business investment also fell short of forecasts, raising some concern about the strength of the nation’s economic recovery.
Bradley said the Canadian dollar has recently become more prone to momentum swings in the economy of Canada’s largest trading partner. He said the recent trend of rising U.S. Treasury yields has generally signaled a stronger Canadian dollar.
“If the U.S. yields continue higher, then you’ll see the U.S. dollar strengthen and you’ll see the Canadian dollar benefit from that as well,” said Bradley.
Canadian bond prices were slightly higher, reflecting some risk aversion by investors. Canada’s two-year bond rose 3 Canadian cents to yield 1.197 percent, while the 10-year bond added 5 Canadian cents to yield 2.121 percent.