Canadian dollar ends down on global growth concern

Thu Feb 7, 2008 4:57pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar closed lower against the U.S. dollar on Thursday, given the nagging concerns that a global economic slowdown could erode demand for the country's key export commodities.

Bond prices fell across the curve as investors crept back into riskier assets like equities ahead of domestic jobs and housing data on Friday.

The Canadian dollar closed at C$1.0108 to the U.S. dollar, or 98.93 U.S. cents, down from C$1.0061 to the U.S. dollar, or 99.39 U.S. cents at Wednesday's close.

During the session the Canadian dollar bounced around in a range of C$1.0129, or 98.73 U.S. cents, to C$1.0076, or 99.25 U.S. cents.

If the slowdown in the U.S. economy hits the global economy it could hurt the Canadian dollar as there would likely be lower demand for Canadian commodities such as oil, gas and metals.

"We're seeing the Canadian dollar basically just fall out of favor here, with the market still concerned about a general recession type scenario in the States," said George Davis, chief technical strategist at RBC Capital Markets.

"But another thing that has sort of contributed to the move ... has been more just the broader based strength in the U.S. dollar than anything else."

Barring a sharp turnaround on Friday, the Canadian dollar is on track to record its first weekly loss in three weeks as the momentum it enjoyed after aggressive U.S. Federal Reserve rate cuts last month appears to have faded.   Continued...

<p>Newly pressed Canadian one dollar coins, also know as loonies, at the Royal Canadian Mint in Winnipeg on November 14, 2007. REUTERS/Fred Greenslade</p>