Canada dollar flat despite bullish data, bonds up

Tue Apr 8, 2008 9:51am EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar was little changed against the U.S. dollar on Tuesday, despite an upbeat report showing a flurry of Canadian home building in March.

Domestic bond prices rose in tandem with the larger U.S. market as investors adjusted their positions.

At 9:32 a.m., the Canadian dollar was at C$1.0130 to the U.S. dollar, or 98.72 U.S. cents, up a tad from C$1.0133 to the U.S. dollar, or 98.69 U.S. cents, at Monday's close.

Canadian housing starts dipped in March, to a seasonally adjusted annualized 254,700 units from 255,600 units in February, according to the Canada Mortgage and Housing Corporation.

While the number far surpassed market expectations for 220,000 starts, it barely budged the Canadian dollar, which may signal a negative trend for the currency in the weeks and months ahead, said David Watt, senior currency strategist at RBC Capital Markets.

"If you don't react bullishly to bullish news, it tells you something about the direction of an asset price," he said.

Concerns about how strongly the U.S. economic downturn will spill over into Canada have kept the Canadian dollar struggling for direction, despite robust prices for the energy and non-energy commodities that Canada produces.

On the data side, the domestic reports have shown consistent resilience, but anything sensitive to the U.S. economy or trade has been getting clobbered.   Continued...