UPDATE 1-Canadian dlr erases overnight drop after U.S. data

Mon Mar 24, 2008 11:26am EDT
 
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 (Recasts)
 By Frank Pingue
 TORONTO, March 24 (Reuters) - The Canadian dollar shot
higher versus the U.S. dollar and moved comfortably off the
two-month low it hit overnight as data from the United States
generated optimism about the U.S. economy.
 At 11:15 a.m. (1515 GMT), the Canadian unit was at C$1.0207
to the U.S. dollar, or 97.97 U.S. cents, up from its overnight
low of C$1.0309 to the U.S. dollar, or 97.00 U.S. cents, which
marked its lowest level since Jan. 23.
 The currency's surge, which follows its 3.6 percent slide
last week, came in one swift move after U.S. data showed
existing home sales for February were better than expected.
 That sent the Canadian currency as high as C$1.0156 to the
U.S. dollar, or 98.46 U.S. cents, before backing off slightly.
 "The home sales number gave the market some glimmer of hope
that maybe things are starting to look better," said Steve
Butler, director of foreign exchange trading at Scotia Capital.
"And certainly the Canadian dollar had a rough end of the week
last week so it's taking back a bit of lost ground."
 The Canadian dollar's freefall last week was pegged to a
combination of weak commodity prices and a strong greenback.
The decline was exaggerated by thin trading heading into the
extended Easter holiday weekend.
 Butler said it was premature to suggest the U.S. data would
signal a turnaround in the U.S. economy, but he felt it would
be enough to keep the currency propped higher for the rest of
the North American session.
 U.S. data showed home sales rose 2.9 percent last month,
breaking a six-month streak of decreasing home sales and
sparking a rally in North American stock markets and in the
Canadian dollar.
 Canada relies on the United States for consuming the bulk
of its exports, so its currency is often influenced by data
that offers insight into the health of the U.S. economy.
 The Canadian economic calendar is empty until Tuesday's
January retail sales data, which is expected to show a 1.2
percent rise in sales after a 0.6 percent climb in December.
 (Editing by Bernadette Baum)