Canadian dollar slides as greenback firms

Tue Sep 23, 2008 4:50pm EDT
 
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* Canadian dollar falls 0.3 percent vs greenback

* Core inflation higher than expected in August

* Bond prices sag as data reinforces idea of BoC on hold

By John McCrank

TORONTO, Sept 23 (Reuters) - The Canadian dollar gave back some of its recent gains against a firmer U.S. dollar on Tuesday, after rising 3.4 percent versus its U.S. counterpart over the previous three sessions on uncertainty surrounding the bailout of the U.S. financial sector.

Canadian bond prices fell after data showed that core inflation rose more than expected in August, reinforcing the idea that the Bank of Canada will not be lowering interest rates any time soon.

The Canadian dollar fell 0.3 percent to end the North American session at C$1.0363 to the U.S. dollar, or 96.50 U.S. cents. That was down from C$1.0334 to the U.S. dollar, or 96.77 U.S. cents, at Monday's close.

"After the recent selloff, the U.S. dollar is finding some stability," said Matthew Strauss, senior currency strategist at RBC Capital Markets.

Investors had been selling U.S. dollars over concerns about how Washington was going to finance its planned $700 billion bailout for the U.S. financial sector.   Continued...