Canadian dollar edges lower on U.S. economic concern

Thu Mar 27, 2008 9:28am EDT
 
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By Frank Pingue

TORONTO, March 27 (Reuters) - The Canadian dollar was down slightly versus the U.S. dollar on Thursday as nagging concerns about what impact a U.S. economic slowdown could have on the domestic economy overshadowed the benefit of lofty commodity prices.

Domestic bonds prices had no Canadian data to consider but were pinned lower across the curve after a U.S. jobless claims report gave dealers an excuse to book profits.

At 9:10 a.m. (1310 GMT), the Canadian unit was at C$1.0195 to the U.S. dollar, or 98.09 U.S. cents, down from C$1.0188 to the U.S. dollar, or 98.15 U.S. cents, at Wednesday's close.

The slide in the Canadian dollar pulled it further from the one-week high of C$1.0095 to the U.S. dollar, or 99.05 U.S. cents, that it reached on Wednesday.

And with no domestic data due until next week to offer investors further proof of the resilient economy in the wake of the slowdown in the United States, the Canadian currency could likely be in for further selling.

"The Canadian dollar weakness comes despite stable economics and a rise in commodities as the threat of an economic spillover from the (United) States continues to weigh on the loonie," said Jack Spitz, director of foreign exchange at National Bank Financial.

"Canada has been showing decent numbers and we don't really see any real evidence of economic weakness in Canada, but markets continue to believe the pain will be felt eventually."

The Canadian economy relies heavily on the United States for consuming the bulk of its exports, so a slowdown in the world's largest economy is expected by many to eventually work its way into Canada.   Continued...