Canadian dollar tilts lower, housing data ignored

Tue Apr 8, 2008 4:52pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar ended flat versus the U.S. dollar on Tuesday in a lackluster session during which economic data that showed March housing starts beat estimates had little impact on investor sentiment.

Canadian bond prices rose on the short end of the curve but trickled lower on the long end after minutes from the U.S. Federal Reserve's latest meeting stoked fears about a recession.

The Canadian dollar closed at C$1.0140 to the U.S. dollar, or 98.62 U.S. cents, down from C$1.0133 to the U.S. dollar, or 98.69 U.S. cents, at Monday's close.

The currency spent the session in a rather tight range of C$1.0160 to the U.S. dollar, or 98.43 U.S. cents, and C$1.0122 to the U.S. dollar, or 98.79 U.S. cents.

Data released early in the session showed housing starts in Canada fell less than the market had expected. And while that offered some proof of a resilient Canadian economy, it did little to spark a move in the Canadian dollar.

Instead, investors tried to gauge whether the worst of the latest financial market turmoil has passed, or whether further fallout from the U.S. economic slowdown lies ahead.

"The market is pausing here to get a sense of whether the slightly better tone in financial markets is indicative of the concerns easing in terms of the credit crunch or whether it's once more a false bottom," said Paul Ferley, assistant chief economist at BMO Capital Markets.

"So basically the market is trying to get a firmer sense in terms of the likely direction of both the economy and financial markets."   Continued...