Canada dollar weakens as U.S. data lifts greenback

Thu Dec 13, 2007 5:08pm EST
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By John McCrank

TORONTO (Reuters) - Some firmer, but not stellar, economic data was not enough to give the Canadian dollar a lift against the U.S. dollar on Thursday as figures showing U.S. consumers are in full holiday shopping mode lessened concerns of a recession and gave the greenback a lift.

Canadian bond prices fell after the solid economic news lessened the appeal of safe-haven government debt.

The Canadian dollar ended at C$1.0201 to the U.S. dollar, or 98.03 U.S. cents, down from C$1.0132 to the U.S. dollar, or 98.70 U.S. cents, at Wednesday's session close.

The currency fell as low as 97.71 U.S. cents during the session, its lowest level since mid-September. In November, it rose as high as US$1.1039, leading top central bank officials and government ministers to express concern about the potential negative impact it would have on the manufacturing sector.

But Statistics Canada said on Thursday that Canadian manufacturing sales inched 0.1 percent higher in October as strong sales in aerospace and other sectors offset weakness in the auto industry.

Analysts in a Reuters survey had expected factory sales to decline by 1 percent.

"Overall, this was a very strong report, suggesting that there still remains some life in the Canadian manufacturing sector, despite the strength of the Canadian dollar and the slowing U.S. economy," said Millan Mulraine, economics strategist at TD Securities.

"The big gain in real shipments will also have important upside implications for Q4 GDP in Canada."   Continued...