Dollar edges higher on growth hopes

Mon Feb 27, 2012 5:15pm EST
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By Jon Cook

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday, helped by data showing an improvement in the U.S. housing market, which fueled hopes of stronger growth by Canada's largest trading partner.

U.S. pending home sales in January hit a near two-year high, defying economists' expectations of a contraction and supporting recent signs the U.S. housing market is improving.

"We're probably going to see the Canadian economy pick up some of the momentum coming out of the States, assuming commodity prices remain supportive of the rally overall even though you get days like this where you get a pullback in oil and a pullback in gold," said Andrew Pyle, a wealth advisor at ScotiaMcLeod.

Oil prices pulled back after a string of higher settlements as concerns that high energy costs might curb economic growth countered supportive fears about Iran and potential supply disruptions. <O/R>

Gold prices also eased, as a weaker euro and oil's retreat halted the metal's attempt to test technical resistance at above $1,800 an ounce following last week's sharp rally. <GOL/>

The Canadian dollar finished at C$0.9992 versus the U.S. dollar, or $1.0008, compared with Friday's close at C$0.9997 to the U.S. dollar, or $1.0003.

The currency hit earlier C$1.0050, its weakest level since February 16.

Breaking beyond that level would open up the way towards C$1.0150, said Adam Button, currency analyst at ForexLive in Montreal.   Continued...