A late rally by commodity prices helped the Canadian dollar recover from steep losses to end slightly higher against the US dollar on Wednesday. Canadian bond prices rose as investors sought the safety of government debt as equity markets sold off on the turbulence in the financial markets.
The Canadian dollar closed at C$1.0688 to the US dollar, or 93.56 US cents, up from C$1.0695 to the US dollar, or 93.50 US cents, at Tuesday's close. The currency spent the day in a wide range between C$1.0617, or 94.19 US cents, and C$1.0810, or 92.51 US cents.
"It's just been a ridiculously volatile session with an absolute turnaround," said Steve Butler, director of foreign exchange at Scotia Capital. The currency hit its highest level in the overseas session and then steadily weakened until midday, dropping 1.6 US cents, until commodity prices started to rally and gave it a boost.
Commodities make up about half of Canada's exports. Gold prices jumped almost $90 to $866 on a safe haven bid, while US crude rose $6 to $97.16 a barrel, helped by a softer greenback and data that showed US inventories fell last week. The safe haven bid was spurred by growing fears over the outlook for the US financial sector, and concerns over the Federal Reserve's bailout of insurer American International Group.
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