Canadian dollar up

21 Sep, 2008

The Canadian dollar rose to its highest point in three weeks against the US dollar on Friday, gaining support from rallying commodity prices on the back of plans for a comprehensive package to sop up the toxic debt that has been clogging US financial and money markets.
Canadian bond prices tumbled on a sharp unwinding of the recent safe-haven bid for government debt. The Canadian dollar ended the North American session at C$1.0500 to the US dollar, or 95.24 US cents, up from C$1.0618 to the US dollar, or 94.18 US cents, at Thursday's close.
The currency gained 1 percent for the week after a soft start as markets reeled from the bankruptcy filing of Lehman Brothers Holdings Inc, which failed to finance risky real estate bets. The sale of Merrill Lynch and a bailout of American International Group followed, freezing up credit markets.
"A few days ago we were looking over a cliff and what we saw was a situation similar to Japan in the 1990s unfolding for the US economy," said Michael Gregory, senior economist at BMO Capital Markets. "Now we are in a position where we are far away from that and we will see, hopefully this spring, signs of stronger growth and resumed credit creation in the economy."

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