Canada dollar up, as hot commodities offset cool data

Mon Apr 7, 2008 9:52am EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar was up slightly against the U.S. dollar on Monday, as robust commodity prices offset the drag from data which showed the level of Canadian building permits fell for the fourth month in a row in February.

Domestic bond prices fell as a positive tone in the equities markets took away some of the safe haven appeal for government debt.

At 9:40 a.m., the Canadian dollar was at C$1.0089 to the U.S. dollar, or 99.12 U.S. cents, up from C$1.0093 to the U.S. dollar, or 99.07 U.S. cents, at Friday's close.

The Canadian dollar has been locked in a range trading on either side of parity for the better part of four months, and it looks likely to stay there for now as speculators are unsure of which way to take it, said Jack Spitz, director of foreign exchange at National Bank of Canada.

"It's trading as a North American currency, so if the market is biased to selling dollars, it will sell Canada as well."

Robust prices for oil and gold, two major Canadian exports, lent support to the Canadian dollar, but it was unable to make strong gains on the greenback due to a weak domestic economic report.

Data that showed that Canadian building permits unexpectedly fell 1 percent in February, which could signal that construction activity is set to cool.

The economic downturn in the United States, which many analysts are calling a recession, was seeded in a collapse of the U.S. subprime mortgage sector, which then spread to the rest of U.S. housing sector.   Continued...