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Canadian dollar briefly trades above 77 cents US as U.S. dollar weakens
MALCOLM MORRISON
Canadian Press
Wednesday, November 12, 2003
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TORONTO (CP) - The Canadian dollar gained nearly a half-cent Wednesday and had its second-highest close in the past decade, although it had been up even higher in the day due to investor disenchantment with the U.S. dollar.
The loonie closed short of the 77.04 cent US high set in intraday trading earlier Wednesday but closed at 76.68 cents US. That was up a substantial 0.47 cent from Tuesday's close and just short of a 10-year high close set last month.
"One does struggle for different things to say about it," said David Wolf, senior economist RBC Capital Markets.
"But the simple fact of the matter is markets, investors, etc. continue to wish to diversify out of U.S.-dollar assets and the Canadian market has been - and appears to continue to be - one of the most attractive places to attract capital."
The last time the dollar has closed above 77 cents US was on Nov. 5, 1993, when it finished the day in Toronto at 77.42. The current 10-year high close is 76.69 cent set on Oct. 22.
That latest series of advances was ignited last Friday by a surprisingly positive jobless report and buttressed on Monday when the latest figures showed housing starts in October at the second highest level in 12 years.
The latest surge also followed a string of losses last week when strong U.S. economic data - in particular a much better than expected third quarter U.S. GDP report - temporarily took investors' attention away from concerns around huge U.S. fiscal and trade deficits.
But as Wolf pointed out, reports like that and last Friday's U.S. employment report seeing respectable job creation don't make up for "some of the structural concerns that people have about the U.S. economy's balance of payments."
The Canadian currency could get another boost Thursday when September trade figures are released in Canada and the U.S.
"Whenever the international trade numbers come out, and it's always the same day and the same time in Canada and the U.S., it just serves as a reminder that Canada has a big surplus and the U.S. has a big deficit and neither one in the long run is really sustainable," observed Wolf.
The Canadian dollar has also been sustained by a 1.75 percentage point spread between Canadian and U.S. interest rates, with money flowing into this country to take advantage of the higher rates |  |  |  |  |
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