Canada dollar trickles lower in lackluster session

Mon May 26, 2008 4:31pm EDT
 
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 * Canadian dollar opens week with lower close
 * traders await key U.S. and Canadian data
 * Bond prices spend session lower across the curve
 By Frank Pingue
 TORONTO, May 26 (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.
 The only key piece of Canadian data this week is Friday's
quarterly gross domestic product report.
 The Canadian dollar rose above the U.S. dollar two weeks
ago then rallied last week to US$1.0184, valuing a U.S. dollar
at 98.19 Canadian cents. It has since been weighed down by
investors who opted to pocket some of their recent gains.
 BOND PRICES PINNED LOWER
 Canadian bond prices all ended lower in a lackluster
session in which the few dealers in attendance opted to wait
for key economic figures later this week before making any
major moves.
 "The market seemed to be a little undecided but I think
we'll start to see more decision later this week," said Leitao,
referring to the U.S. new home sales data for April due out on
Tuesday and Friday's Canadian GDP report.
 The two-year bond ended down 6 Canadian cents at C$101.43
to yield 3.014 percent. The 10-year bond dropped 16 Canadian
cents to C$102.66 to yield 3.650 percent.
 The yield spread between the two- and 10-year bond was 63.6
basis points, down from 63.9 at the previous close.
 The 30-year bond shed 15 Canadian cents to C$115.45 for a
yield of 4.086 percent.
 The three-month when-issued T-bill yielded 2.67 percent,
unchanged from the previous close.