Published: Thu, 26 Feb 2009 21:47:38 +0100

Canadian Dollar Lifted by Rising Stock Market

(CEP News) - Unexpectedly strong quarterly reports from Canadian banks and a rally in energy prices boosted the Canadian dollar on Thursday.

The U.S. dollar fell 0.0068 to 1.2503 (79.98 cents USD) on the session.

The loonie, as the currency is nicknamed, has been trading close to 1.25 since mid-January. Adam Fazio, currency strategist at CIBC World Markets, doesn't see a catalyst for a powerful move in the currency pair.

"You're going to continue to be range bound for awhile," he said.

In the past three sessions, USD/CAD has fallen to a session low of 1.2400 before rebounding. On the upside, the pair has struggled to hold gains above 1.26.

The Canadian dollar is higher against all its major trading partners on Thursday, with the exception of the UK pound sterling.

The catalyst has been a rise in Canadian share prices and energy markets. Quarterly reports from the Royal Bank of Canada and CIBC beat estimates and put a renewed focus on the health of the Canadian banking sector. The TSX gained nearly 3% on Thursday despite a decline in U.S. stocks.

Also helping the loonie was a rise in the price of oil. Nymex crude gained $2.15 to $44.65 on the session after Abu Dhabi said it was cutting oil shipments to Asia.

All data taken at 3:40 p.m. EST.

By Adam Button, abutton@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca