CANADA FX DEBT-C$ slips as factory sales weigh, bonds steady

Tue Mar 17, 2009 10:01am EDT
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* C$ weakens on further evidence of slowing economy

* Canadian factory shipments fall 5.4 percent in January

* U.S. housing starts up 22.2 percent, more than expected

* Bonds steady, await outcome of two-day Fed meeting

TORONTO, March 17 (Reuters) - The Canadian dollar was lower against the U.S. currency on Tuesday morning on news that Canadian factory sales fell sharply in January.

Ahead of the data, the currency was at its weakest level of the session at C$1.2765 to the U.S. dollar, or 78.34 U.S. cents.

It popped to C$1.2729 to the U.S. dollar, or 78.56 U.S. cents, after a U.S. government report showed U.S. housing starts rose 22.2 percent, more than expected, in February. That decreased bids for the safe-haven U.S. currency and gave the Canadian dollar pause to inch higher. [ID:nCAT002557]

But further evidence of an eroding Canadian economy put pressure on the currency as data showed factory sales tumbled 5.4 percent in January from the previous month due to the meltdown in the auto industry. The number was slightly ahead of the 5.8 percent decline expected and followed an 8.2 percent drop in December. [ID:nN17446129]

"The manufacturing shipments certainly were weak, unequivocally," said Charmaine Buskas, senior economics strategist at TD Securities. "It does provide some confirmation that the manufacturing sector of the Canadian economy is indeed suffering, so I think we're seeing the Canadian dollar slip on that front."   Continued...