Loonie ends higher as data hits greenback

Tue Jun 24, 2008 4:38pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

TORONTO (Reuters) - The Canadian dollar closed higher on Tuesday as weak U.S. data weighed on the greenback, but its move was limited ahead of the rate decision from the Federal Reserve due on Wednesday.

Domestic bond prices, with no Canadian data to consider, followed the bigger U.S. Treasury market to a higher close after weak data from south of the border provided more evidence for the view that the Fed would hold off on any increase in interest rates for some time.

The Canadian dollar closed at C$1.0115 to the U.S. dollar, or 98.86 U.S. cents, up from C$1.0158 to the U.S. dollar, or 98.44 U.S. cents, at Monday's close.

The domestic currency spent the quiet session in a tight range as traders avoided huge commitments until after the U.S. Federal Open Market Committee rate decision and, to a larger extent, its accompanying statement.

The market, which largely expects no change to the Fed's key rate, wants to see if the central bank offers any clues as to their future bias towards interest rates.

"The Canadian dollar is tracking a little bit higher here but I don't think there is a whole lot of conviction as people are generally still waiting for the FOMC," said Shaun Osborne, chief currency strategist at TD Securities.

"Until there is a story that differentiates Canada from whatever else is going on in the U.S., we are probably going to see this range trading continue."

The commodity-linked Canadian dollar was also supported by a rise in oil prices, but the impact was muted as oil settled below its session high comfortably below the record near $140 a barrel reached last week.

BOND PRICES MIXED   Continued...

<p>Newly pressed Canadian one dollar coins, also know as loonies, at the Royal Canadian Mint in Winnipeg on November 14, 2007. REUTERS/Fred Greenslade</p>