Dollar falls again as oil prices drop

Mon Aug 11, 2008 5:05pm EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar opened the week with a lower close versus the U.S. dollar on Monday as the slide in oil prices rattled the commodity-linked currency, which has fallen in all but one session in the past three weeks.

Bond prices ended lower across the curve as the slide in the U.S. Treasury market spilled north of the border and wiped away gains recorded early in the session after weak Canadian housing starts figures.

The Canadian dollar closed at C$1.0693 to the U.S. dollar, or 93.52 U.S. cents, down from C$1.0674 to the U.S. dollar, or 93.69 U.S. cents, at Friday's close.

For the past few weeks the Canadian dollar has been unable to shake off a funk caused by a combination of a stronger U.S. dollar, concerns about global growth and a sharp drop in oil prices from last month's record high above $147 a barrel.

"The downward pressure is still there," said Paul Ferley, assistant chief economist at Royal Bank of Canada. "A generally stronger U.S. dollar, with the catalyst being abetted by further weakening in oil prices, is doing the driving."

Early in the session the Canadian currency had rallied to a high of C$1.0645 to the U.S. dollar, or 93.94 U.S. cents, and after losing 3.8 percent last week it appeared ready to end a seven-session losing skid.

Canadian trade data due out on Tuesday is expected to show the country's trade surplus widened to C$5.80 billion in June from C$5.54 billion in May, according to analysts surveyed by Reuters.

Figures that have been released in recent weeks have pointed to a slowing economy, including gross domestic product and jobs data that both missed estimates.   Continued...