Canadian dollar dips against stronger greenback

Tue Aug 19, 2008 10:17am EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar was slightly lower against its U.S. counterpart on Tuesday as some stronger-than-expected domestic data was not enough to offset weaker commodity prices and a stronger greenback.

Domestic bond prices were mixed as early gains were largely reversed after a higher-than-expected U.S. inflation report.

At 9:30 a.m. (1330 GMT), the Canadian dollar was at C$1.0645 to the U.S. dollar, or 93.94 U.S. cents, down from C$1.0643 to the U.S. dollar, or 93.96 U.S. cents, at Monday's close.

The Canadian dollar spent the overnight session in a tight range of C$1.0669 and C$1.0632, slowly slipping against the U.S. dollar as commodity prices weakened.

U.S. crude oil fell below $112 a barrel, having since bounced back some, and gold prices sank well below $800 an ounce.

Canada's oil sands contain the largest oil reserves outside the Middle East and is a net exporter of many key commodities.

During the North American session, data showing that U.S. producer prices rose more than expected helped the greenback extend its gains across nearly all major currencies.

The market had been more focused on economic growth concerns, but the U.S. data puts inflation back in the spotlight, and could point to higher U.S. interest rates in the not-too-distant future.   Continued...