Canadian dollar edges higher after latest slide

Mon Jan 14, 2008 8:55am EST
 
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rebounded slightly versus the U.S. dollar on Monday following last week's tumble, but the gains were due mostly to a weak greenback ahead of a raft of U.S. bank results.

Domestic bond prices, which rallied last week on a string of weak Canadian economic data reports, turned slightly lower ahead of the Bank of Canada's Business Outlook Survey.

At 8:40 a.m., the Canadian unit was at 98.12 U.S. cents, valuing a U.S. dollar at C$1.0192, up from 98.07 U.S. cents, or C$1.0197, at Friday's close.

The slight rise in the Canadian dollar follows a 1.8 percent slide last week amid weak domestic data, notably Friday's disappointing jobs report which all but locked in a Bank of Canada rate cut later this month.

But the modest rebound in the Canadian dollar came against a greenback which remained down against overseas currencies, or crosses, as investors could not ignore the potential fallout in Canada from any economic slowdown in the United States.

"It's up very slightly against the U.S. dollar but it's down against just about every other currency on the view that if the U.S. economy is vulnerable then Canada is vulnerable to spillover effects from that," said Adam Cole, currency strategist at RBC Capital Markets in London.

"So the Canadian dollar is gaining a bit (versus the U.S. dollar) by default but gaining less than other currencies."

The economic calendar in Canada will slow down this week with the central bank's Business Outlook Survey at 10:30 a.m. and Friday's manufacturing sales report for November being the two key events.   Continued...