Canadian dollar trickles lower in quiet session

Mon Jun 23, 2008 4:57pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar closed slightly lower versus the U.S. dollar in a lackluster session given the absence of any domestic data and hesitation ahead of a rate decision by the Federal Reserve due later this week.

Domestic bond prices finished mostly flat across the curve after a rally last week and ahead of U.S. data this week that could come in below expectations.

The Canadian dollar closed at C$1.0158 to the U.S. dollar, or 98.44 U.S. cents, down from C$1.0170 to the U.S. dollar, or 98.33 U.S. cents, at Friday's close.

The domestic currency stayed in a relatively narrow range all session, which is likely to be the case for the rest of the week, as there are no key economic releases that have the muscle to trigger a move.

"Certainly for the most part the lack of data in Canada is going to probably suggest at first blush that the currency is going to be rangebound this week," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

"We're seeing a consolidative, congestive move in the Canadian dollar, which is still being torn between rising crude prices against the backdrop of a rising U.S. dollar today."

Spitz also said the Fed's rate announcement on Wednesday, and even more its communique, could be a catalyst for a move in the U.S. dollar and by default, the Canadian dollar.

The Fed is widely expected to hold its key rate steady at 2 percent, but the market will be watching more to see if the central bank shifts its bias to monetary tightening as it seeks to rein in inflation.   Continued...