C$ steady on benign CPI data; U.S. economy in focus

Fri Oct 18, 2013 6:36pm EDT
 
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By Leah Schnurr

TORONTO (Reuters) - The Canadian dollar was little changed on Friday after a benign domestic inflation report and as investors tried to gauge what impact of the recent U.S. government shutdown would be on the world's largest economy.

The uncertainty weighed on the greenback, though the currency cut some of its earlier declines, and kept the loonie largely to a narrow trading range.

A partial shutdown of the U.S. government, which was resolved earlier this week, has raised concerns about how much of a bite it will take out of the already fragile economic recovery. That casts some uncertainty on Canada's economic prospects, as the United States is Canada's largest trading partner.

Investors are also speculating that the impact from the shutdown will see the Federal Reserve maintain the current pace of its economic stimulus program for longer than had been expected.

On the domestic front, the loonie saw little reaction to data that showed the annual inflation rate was unchanged in September, leaving the Bank of Canada with plenty of room to keep interest rates low.

"The Canadian dollar is going to be sidelined, realistically, and I don't see us getting out of our recent ranges," said John Curran, senior vice president at CanadianForex.

Curran sees the Canadian dollar staying within a range of C$1.01 and C$1.06 for the remainder of the year.

The Canadian dollar ended the North American session at C$1.0294 versus the greenback, or 97.14 U.S. cents, just a tad weaker than Thursday's close of C$1.0293, or 97.15 U.S. cents.   Continued...