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CANADA FX DEBT-C$ turns higher with oil rally

Published 06/23/2009, 03:36 PM
Updated 06/23/2009, 03:42 PM

* C$ bounces back from five-week low

* Oil rally outweighs disappointing U.S. housing data (Updates with details)

TORONTO, June 23 (Reuters) - The Canadian dollar bounced back from a five-week low against the U.S. currency on Tuesday as rising oil prices and equity markets put the commodity-linked currency up slightly on the day.

The price of oil, a key Canadian export, rallied to above $69 a barrel, after falling below $67 earlier, and the Canadian dollar tracked these movements.

Crude's swings also lifted Toronto's resource-heavy stock index, [ID:nN2378521] which has frequently been a telltale sign of where the Canadian dollar was headed.

"The commodity story did ultimately help to buoy the Canadian dollar," said Eric Lascelles, chief economics and rates strategist, at TD Securities.

At 3:23 p.m. (1923 GMT), the currency was at C$1.1500 to the U.S. dollar, or 86.96 U.S. cents, up from C$1.1526 to the U.S. dollar, or 86.76 U.S. cents, at Monday's close.

At one point, the currency fell as low as C$1.1583 to the U.S. dollar, or 86.33 U.S. cents, shortly after U.S. data pointed to a sluggish recovery from the recession.

Numbers showed sales of previously owned homes in the United States rose at a slower than expected pace in May. [ID:nN23475172]

Meanwhile, Canadian bond prices were mixed as the short end was lower while the long end advanced.

With a dearth of economic data in Canada, focus turned to the two-day U.S. Federal Reserve policy meeting that began on Tuesday.

The market will be watching to see the U.S. central bank's economic outlook and for further details on its debt buying program. (Reporting by Ka Yan Ng; editing by Rob Wilson)

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