Canada's currency fell against the US dollar on Wednesday after earlier touching a one-year high, as weakening oil prices and a lackluster showing on stock markets dragged the unit lower. The currency turned south at midday as risk appetite waned, with US stocks pulling back after two days of gains, while Toronto stocks were little changed.
The Canadian dollar, like the equity market, often strengthens or falls depending on the risk appetite of international investors. The Canadian unit was at C$1.0640 to the US dollar, or 93.98 US cents, down from C$1.0596 to the US dollar, or 94.38 US cents, at Tuesday's close.
Earlier in the day, the Canadian dollar shot up to 95 US cents on an upbeat tone that spilled over from Tuesday when the Reserve Bank of Australia raised its interest rate, becoming the first central bank in the Group of 20 nations to tighten policy as the financial crisis abates.
The Australian move fed hopes that the global economy is recovering and will boost equity markets and demand for commodities, which also helped to send gold to a record high above $1,048 an ounce. But oil prices slipped below $70 a barrel on Wednesday, boosted in part by a rebound in the greenback, which rose as the optimism that followed Australia's rate hike dissipated and traders saw the currency's decline as being overdone. On Friday, the market will focus on domestic jobs data for September.