Dollar ends down after weak domestic data

Mon Apr 7, 2008 4:34pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar closed lower against the U.S. dollar on Monday as data showing an unexpected slide in domestic building permits more than offset the positive backdrop of higher commodity prices.

Domestic bond prices were unable to overcome early losses and ended lower across the curve, even though the rally in equity markets, which sapped the appetite for government debt, faded as the session wore on.

The Canadian dollar closed at C$1.0133 to the U.S. dollar, or 98.69 U.S. cents, down from C$1.0093 to the U.S. dollar, or 99.07 U.S. cents, at Friday's close.

Economic data that showed the value of Canadian building permits dropped 1 percent in February weighed on the Canadian dollar as the market was looking for a gain of 1 percent.

While not a top-tier report, the data followed Friday's jobs figures, which showed the economy posted a moderate increase in jobs for March after two red-hot months of growth, keeping economic concerns at the forefront.

"I'm not going to put a lot of weight on the building permits number but it is one of those indicators that suggests that the Canadian economy is beginning to cool off," said David Watt, senior currency strategist at RBC Capital Markets.

"The headwinds out of the U.S. and the concerns about the Canadian economy ... gave room for U.S. dollar bulls and gave a bearish tone to the Canadian dollar."

For the commodity-linked Canadian dollar, which closed a sliver above its session low, its latest slide came despite a $3 jump in oil prices to above $109 a barrel and a surge in gold prices to a one-week high.   Continued...