Dollar ends losing skid with modest gain

Thu Apr 24, 2008 5:08pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar rose versus the U.S. dollar on Thursday and ended a three-session skid as profit-taking weighed on the greenback.

Bond prices could not generate any momentum from Bank of Canada comments that Canadian economic growth is near a standstill and instead followed the bigger U.S. Treasury market to a lower close across the curve.

The Canadian dollar closed at C$1.0142 to the U.S. dollar, or 98.60 U.S. cents, up from C$1.0173 to the U.S. dollar, or 98.30 U.S. cents, at Wednesday's close.

The currency rallied to a session high of C$1.0121 to the U.S. dollar, or 98.80 U.S. cents, after a Bank of Canada Monetary Policy Report that said Canadian growth will plunge in the second quarter and recover in the second half of 2009.

But after dropping in three straight sessions versus its U.S. counterpart, the Canadian dollar found support in the form of profit-taking that hit the greenback.

"With dollar/cad we're just seeing dollar longs being covered, so profit-taking is the theme," said Gareth Sylvester, senior currency strategist at HIFX Plc in San Francisco.

The boost in the Canadian dollar helped it recover some of the losses suffered this week after a hefty 50 basis point interest rate cut by the Bank of Canada on Tuesday and data that cast doubt on the resiliency of domestic spending amid faltering U.S. demand for Canadian goods.

The Bank of Canada said declining exports to a weakening U.S. market will drag domestic economic growth to 0.3 percent in the second quarter of this year from its previous estimate of 2 percent.   Continued...