Canadian dollar falls on key data

Tue Feb 19, 2008 9:45am EST
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TORONTO (Reuters) - The Canadian dollar slipped against the U.S. dollar on Tuesday, following a holiday on Monday, in the wake of key data which supported the view that the Bank of Canada will cut interest rates again when it next meets in March.

Domestic bond prices fell on the data.

At 9:13 a.m., the Canadian dollar was at C$1.0110 to the U.S. dollar, or 98.91 U.S. cents, down from C$1.0075 to the U.S. dollar, or 99.26 U.S. cents, at Friday's close.

Toronto financial markets were closed Monday for a provincial holiday.

Canada's annual inflation rate slowed to 2.2 percent in January from 2.4 percent in December as a cut in the federal sales tax and a strong currency lowered prices.

The core inflation rate, which excludes volatile items and guides the Bank of Canada's monetary policy, fell to 1.4 percent, its lowest since July 2005. The Bank of Canada targets inflation at 2 percent.

Data from Statistics Canada also showed that tumbling auto sales dragged down Canada's wholesale trade by 2.9 percent in December, more than expected and bringing the value of monthly sales to their lowest since November 2006.

Analysts had expected a decline of just 0.6 percent on average in wholesale activity in December from November.

The commodities-based Canadian dollar had begun to climb against the U.S. dollar prior to the data, but was unable to find any traction.   Continued...