Canada dollar flat, held back by weak commodities

Fri Sep 26, 2008 9:42am EDT
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* Canadian dollar little changed against weaker dollar

* Fears over U.S. bailout plan give bid to Canadian bonds

By John McCrank

TORONTO, Sept 26 (Reuters) - The Canadian dollar was flat against a weaker U.S. dollar on Thursday as lower commodity prices prevented the currency from making gains against the greenback, which is under pressure over a lack of resolution to the cash and credit crunch in the U.S. financial sector.

Bond prices rose as participants looked for safe investments during the financial turmoil.

At 9:40 a.m. (1340 GMT), the Canadian dollar was at C$1.0343 to the U.S. dollar, or 96.68 U.S. cents, unchanged from Thursday's close.

"Canada's had a pretty good run, and we seem to be getting quite comfortable in the C$1.03s, but commodities are off and it looks like we're just going to be caught waiting and watching and seeing if they (U.S. lawmakers) can come to some kind of resolution over this whole bailout package," said Steve Butler, director of foreign exchange trading at Scotia Capital.

The Canadian dollar has risen around 4 percent against the U.S. dollar in the past couple weeks, mainly due to the mounting problems in the beleaguered U.S. financial sector.

Washington Mutual Inc was the latest bank to fail in the crisis and the largest failure in U.S. history. See [ID:nN25440417]. It had suffered from soaring mortgage losses, and its assets were sold to JPMorgan Chase for $1.9 billion overnight.   Continued...