Canadian dollar ends session, and week, lower

Fri Jul 4, 2008 4:25pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar limped to a lower close versus the U.S. dollar on Friday and capped off its first losing week in three after a thin, quiet session in which moves were amplified because U.S. markets were closed for Independence Day.

Canadian bond prices, which underperformed the U.S. Treasury market all week, continued to benefit from pared expectations for U.S. Federal Reserve interest rate hikes and ended higher across the curve.

The Canadian dollar closed at C$1.0200 to the U.S. dollar, or 98.04 U.S. cents, down from C$1.0188 to the U.S. dollar, or 98.15 U.S. cents, at Thursday's close.

For the week the Canadian dollar fell 0.9 percent.

But the drop in the Canadian currency did not draw too much concern in a week of trading made slow by the July 4 U.S. holiday and Tuesday's Canada Day holiday.

"Liquidity is much lower than usual and not surprisingly the markets are illiquid," said Matthew Strauss, senior currency strategist at RBC Capital Markets. "But the move that we did see today in the Canadian dollar was more driven by flows rather than any strong directional bids."

That explains why the Canadian dollar rallied to C$1.0151 to the U.S. dollar, or 98.51 U.S. cents, during the first half of the North American session before trickling lower.

The only Canadian data to consider in the session, the Ivey Purchasing Managers Index, showed business purchasing activity increased more than expected in June but also signaled the jobs market may be weakening.   Continued...