Canada dollar ends flat after hitting 1-week high

Tue Feb 12, 2008 5:02pm EST
 
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar finished flat versus the U.S. dollar on Tuesday in a session in which it hit a one-week high ahead of data that could point to a recession in the United States.

Canadian bond prices closed lower after billionaire Warren Buffett offered to take over some liabilities of bond insurers and spoiled the appetite for government debt.

The Canadian dollar closed at C$1.0010 to the U.S. dollar, or 99.90 U.S. cents, up from C$1.0015 to the U.S. dollar, or 99.85 U.S. cents, at Monday's close.

Early in the session the Canadian dollar rose to US$1.0062, valuing a U.S. dollar at 99.38 Canadian cents. That marked the currency's highest level in a week, but it handed nearly all its gains back by the session's close.

The Canadian dollar's reversal from its session high was blamed on anxiety ahead of U.S. retail and international trade data due in the coming days, which could shed light on whether the economy of Canada's key trading partner is headed for a recession.

"Markets are waiting for more information on the U.S. economy," said Paul Ferley, assistant chief economist at Royal Bank of Canada. "They want to get a better read in terms of whether that economy is moving into a recession or not in the first half of this year."

Recent Canadian data has painted a picture of a resilient economy, but the United States takes in about three-quarters of Canadian exports, so any slowdown there could hit the Canadian economy hard.

The Canadian dollar has been locked in a relatively tight range lately, but U.S. economic reports have the potential to offer a lasting trend for the currency, Ferley said.   Continued...