Loonie flat after overnight gain reversed
By Frank Pingue
TORONTO (Reuters) - The Canadian dollar was almost flat versus the U.S. dollar on Thursday after handing back the bulk of its overnight gain given global economic concerns.
Domestic bond prices turned lower, following the lead of the bigger U.S. Treasury market, after economic data from the United States showed an unexpected drop in jobless claims.
At 9:05 a.m. EST, the Canadian unit was at 97.82 U.S. cents, valuing a U.S. dollar at C$1.0223, up from 97.60 U.S. cents, or C$1.0246, at Wednesday's close.
A record quarterly net loss from brokerage Merrill Lynch MER.N stirred credit crisis fears and was expected to weigh on equity markets, which will ultimately curb investor appetite for the Canadian dollar.
The domestic currency rallied overnight to 98.21 U.S. cents along with higher equity markets overseas and oil prices, but the likelihood of another drop in North American stock markets ate away at the gains.
"It's trading lock-step with global equity markets as Canada in particular is seen as such a strong play on global growth because of the nature of Canada's exports," said Adam Cole, currency strategist at RBC Capital Markets in London.
The Canadian dollar is down about 3 percent in 2008, and much of that drop has been blamed on weaker equity markets and fears that demand for commodities will wane if the U.S economy slides into recession.
The United States consumes about three-quarters of Canada's exports, and as the odds of a recession in the United States increase, the outlook for Canada sours. Continued...