Canadian dollar rises against soft US$

Tue Jan 15, 2008 5:37pm EST
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By John McCrank

TORONTO (Reuters) - The Canadian dollar edged higher against a broadly weaker U.S. dollar on Tuesday, but a lack of domestic data ahead of next week's Bank of Canada monetary policy announcement left it rangebound.

Domestic bond prices rallied as market players sought safe haven investments due to plunging stock markets.

The Canadian dollar closed at 98.37 U.S. cents, valuing a U.S. dollar at C$1.0166, up from 98.22 U.S. cents, or C$1.0181, at Monday's close.

The currency spent the session in a relatively tight range of C$1.0192 to C$1.0135 to the U.S. dollar.

"I think that shows a market that is unclear of the direction it really wants to take the Canadian dollar," said David Watt, senior currency strategist at RBC Capital Markets.

A lack of domestic data was partly responsible for the Canadian dollar underperforming most other major currencies against a broadly weaker U.S. dollar said Watt.

The greenback took a beating after U.S. retail sales numbers for December came in slightly below market expectations.

"I think the weakness in the U.S. retail sales was to an extent overplayed because we should be accustomed now to the idea that holiday spending spreads over January and February because of gift cards," said Watt.   Continued...