Canadian dollar ends down in last session of 2007

Mon Dec 31, 2007 3:00pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar ended lower against the U.S. currency on Monday in the last session of 2007, but still recorded a big gain for the year, including its first stint above parity in 31 years.

Domestic bond prices, with no Canadian economic data to consider until later in the week, followed the bigger U.S. market to a higher close.

The Canadian dollar ended at US$1.0087, valuing each U.S. dollar at 99.13 Canadian cents, down from Friday's close of US$1.0198, or 98.05 Canadian cents per U.S. dollar.

After rising to US$1.0240 overnight, the Canadian currency spent the North American session in a steady decline that left it at its lowest level in ten days.

But there was little concern with the slide as thinly staffed trading desks upped the chances for exaggerated currency moves ahead of the New Year's Day holiday on Tuesday.

"I think we'll probably get a better test in terms of the underlying strength for the Canadian dollar in the second half of this week as volumes start to increase," said Paul Ferley, assistant chief economist at Royal Bank of Canada.

For the year, the currency rose about 17.5 percent against its U.S. counterpart, due largely to higher commodity prices, strong domestic data, merger-related interest, a weak greenback and higher domestic interest rates.

That gain included a torrid climb past parity with the U.S. dollar in September for the first time since 1976. It touched a modern-day high of US$1.1039 in November before retreating.   Continued...