Dollar trickles lower in lackluster session

Mon May 26, 2008 4:33pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar fell versus the U.S. dollar on Monday due to concern about how lofty energy prices could crimp global economic growth, but the currency's move was limited by an absence of trade because of the U.S. Memorial Day holiday.

Canadian bond prices were pinned lower across the curve all session as dealers awaited key U.S. and Canadian economic data due out later this week.

The Canadian dollar closed at US$1.0081, valuing a U.S. dollar at 99.20 Canadian cents, down from US$1.0119, valuing a U.S. dollar at 98.82 Canadian cents, at Friday's close.

Prices for many of the commodities that Canada produces are sitting at high levels but they are not having as positive an impact on the currency as they once had.

The domestic currency shot 17.5 percent higher last year versus the U.S. dollar due in large part to gains in the price of oil. But crude oil has soared almost 40 percent this year and the Canadian dollar is only up about 0.5 percent.

"I suspect the key issue still is energy prices -- oil and natural gas -- but to what extent those higher prices may be having an impact on the economic outlook for the world and more specifically for the United States," said Carlos Leitao, chief economist at Laurentian Bank of Canada in Montreal.

"But all in all it's been a fairly quiet trading day."

The Canadian currency, coming off a third straight winning week against the U.S. dollar, dropped to its lowest level in nearly a week shortly after midday, when it touched US$1.0065, valuing a U.S. dollar at 99.35 Canadian cents.   Continued...

<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal, April 28, 2006. REUTERS/Shaun Best</p>