Canadian dollar flat and quiet as investors watch U.S. talks

Thu Dec 27, 2012 9:10am EST
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar was largely unchanged against its U.S. counterpart in quiet trading on Thursday as investors wait for developments in the U.S. budget talks to avert a fiscal cliff and square positions ahead of the year-end.

Markets have been in limbo since last week when President Barack Obama and U.S. lawmakers suspended talks until after Christmas on avoiding $600 billion of spending cuts and tax increases that some economists say threaten to send the economy back into recession.

"We're starting off very quietly as we did yesterday," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets.

"We may see some year-end things that corporates need to get done, that will hopefully give us some movement, and we've also got the whole fiscal cliff situation coming down to the wire, so there is potential for things to move, we'll just have to wait and see."

At 8:43 a.m. (1343 GMT), the Canadian dollar stood at C$0.9921 versus the U.S. dollar, or $1.0080, just slightly weaker than Monday's North American session close at C$0.9913 versus the U.S. dollar, or $1.0088.

North American markets were closed on December 25 and most Canadian markets remained shut on Wednesday for Boxing Day, so Thursday was the first day of normal trade since markets closed on Monday, Christmas Eve.

Efforts to prevent the U.S. economy from going over a "fiscal cliff" stirred back to life on Wednesday with less than a week to go before potentially disastrous tax hikes and spending cuts kick in at the New Year.

In a sign that there may be a way through deadlock in Congress, Republican House of Representatives Speaker John Boehner urged the Democrat-controlled Senate to act to pull back from the cliff and offered to at least consider any bill the upper chamber produced.   Continued...

Canadian currency in the form of twenty dollar bills are displayed in this posed photograph in Toronto, October 22, 2008. REUTERS/Mark Blinch