TORONTO (Reuters) - Canada’s dollar closed exactly at par with the U.S. dollar for the first time in seven weeks on Thursday in quiet trade, supported by an upbeat long-term outlook for the U.S. economy.
Despite a retreating price of crude oil to below $90 a barrel, the commodity-influenced Canadian dollar stayed close to parity with the greenback on Thursday, as it has all week.
It was the first time since November 10 that the Canadian dollar closed at par, up slightly from C$1.0006 to the U.S. dollar, or 99.94 U.S. cents, at Wednesday’s close.
The Canadian dollar has reached a one-for-one footing with the U.S. currency several times this year but has not maintained that level for long.
TD Securities said the currency’s movements this week were reminiscent of the beginning of November, when it spent about a week testing parity before retreating toward C$1.03 to the U.S. dollar.
Slim trading volumes ahead of the New Year’s holiday may put the Canadian dollar in choppy conditions but, overall, analysts expect the currency will hover around parity into 2011.
“We may tomorrow see some end-of-year portfolio balancing which might provide some volatility. But, overall, traders are still expecting to see minor movement for the remainder of 2010,” said Darren Richardson, corporate dealer at CanadianForex.
Thursday’s North American trading range was a scant 28 ticks, between C$0.9995 and C$1.0023 to the U.S. dollar.
Mounting confidence about the U.S. economy should help support the currency because Canada’s export-oriented economy is closely tied to the health of the United States.
Upbeat data on the U.S. jobs market and manufacturing sector on Thursday helped support the view that the U.S. economy gained momentum as the year ended, setting the stage for a stronger performance in 2011.
The data helped push Canadian government bond prices lower, with the two-year bond down 3 Canadian cents to yield 1.709 percent. The 10-year bond was off 4 Canadian cents to yield 3.166 percent. Canadian government debt put in a mixed performance against U.S. Treasuries.
Reporting by Ka Yan Ng; editing by Rob Wilson