Canadian dollar flat on spillover concerns

Thu Feb 21, 2008 9:51am EST
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By John McCrank

TORONTO (Reuters) - The Canadian dollar was almost unchanged against a generally weaker U.S. dollar on Thursday, as investors remained concerned that the economic downturn in Canada's biggest trading partner could spill across the border.

Domestic bond prices, with no domestic data to influence direction, were mixed.

At 9:30 a.m. EST the Canadian dollar was at C$1.0128 to the U.S. dollar, or 98.74 U.S. cents, up slightly from C$1.0130 to the U.S. dollar, or 98.72 U.S. cents, at Wednesday's close.

"Generally speaking, the U.S. dollar is a bit softer today, but Canada seems to be the exception to that," said Adam Cole, currency strategist at RBC Capital Markets in London.

"The assumption is that the Canadian and U.S. economies are joined at the hip."

The Canadian dollar has been mostly rangebound for several weeks now, first trading around the parity level, and then moving into the C$1.01 range after some weaker than expected data last week.

The currency has been supported to some degree by strong oil prices, which rose on Wednesday to a record high of $101.32 a barrel.

Canada is a major energy producer and exporter and much of the currency's 60 percent rise since 2002 has been attributed to the run-up in crude prices.   Continued...