Canadian dollar falls on oil, economic concerns

Thu May 1, 2008 9:37am EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar fell nearly one percent against the U.S. dollar on Thursday, weakened by softer oil prices and concerns over the health of the economy.

Domestic bond prices followed the U.S. market higher.

At 9:10 a.m., the Canadian dollar was at C$1.0169 to the U.S. dollar, or 98.33 U.S. cents, down from C$1.0072 to the U.S. dollar, or 99.29 U.S. cents, at Wednesday's close.

The market is thinner than usual as many overseas markets are closed for the May Day holiday.

"We have slightly softer oil prices this morning, but we are still stuck in the trading range, so I don't foresee Canada selling off too much from here," said Steve Butler, director of foreign exchange at Scotia Capital.

The price of oil often influences the direction of Canada's currency as it is a major Canadian export.

Butler said the market is also starting to wonder how much of the weakness from the U.S. economic downturn is spilling over into Canada.

Bank of Canada Governor Mark Carney repeated to a parliamentary committee on Wednesday that Canada will likely need to add further monetary stimulus, but that it will depend on the evolution of the global economy and domestic demand.   Continued...

<p>A Royal Canadian Mint employee holds freshly pressed Canadian one dollar coins in Winnipeg, November 14, 2007. REUTERS/Fred Greenslade</p>