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C$ lifted by oil strength, climbing equities

TORONTO - The Canadian dollar rose against the U.S. currency on Tuesday, as the price of oil rose and equity markets climbed after tumbling the previous session.

At 7:29 a.m. (1129 GMT), the unit was at C$1.2542 to the U.S. dollar, or 79.73 U.S. cents, up from Monday’s finish at C$1.2618 or 79.25 U.S. cents.

At one point on Tuesday, the Canadian unit touched 1.2503 to the U.S. dollar, or 79.98 U.S. cents.

“As equity markets rally that tends to lower levels of risk aversion and it tends to point to a slightly more optimistic outlook for the markets and the global economy,” said George Davis, chief technical strategist at RBC Capital Markets.

“The Canadian dollar tends to benefit from that type of backdrop.”

Davis added strength in the price of oil CLc1, which climbed to nearly $50 a barrel, also underpinned the currency’s strength [ID:nLV397488]. Canada is a major exporter of oil.

Canadian government bond prices were mixed across the curve, with the short end largely flat and the long end lower.

The rise comes after the threat of bankruptcy at General Motors GM.N and Chrysler drove the Canadian dollar to almost a two-week low against the U.S. currency on Monday as the greenback benefited from a flight to safety, as did bonds.