Loonie inches higher vs weakened greenback

Tue Sep 23, 2008 10:11am EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar was slightly stronger against the U.S. dollar on Tuesday, as uncertainty about the U.S. government's $700 billion rescue plan for its troubled financial sector weighed on the greenback.

Canadian bond prices were little changed, lagging the moves of the bigger U.S. market, as investors waited to see what would develop with the proposed U.S. bailout package.

At 9:40 a.m. EDT, the Canadian dollar was at C$1.0320 to the U.S. dollar, or 96.90 U.S. cents, up from C$1.0334 to the U.S. dollar, or 96.77 U.S. cents, at Monday's close.

The currency rose 0.1 percent after gaining 1.6 percent against the greenback on Monday.

"The (U.S.) dollar obviously had a disastrous day yesterday... so I'm not surprised to see things settle a little bit this morning," said Steve Butler, senior currency strategist at Scotia Capital.

All eyes were on the U.S. Congress, where U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke were scheduled to answer questions from the Senate Banking committee at 1330 GMT.

In a prepared text, they warned of dire consequences for financial markets if their $700 billion bailout package were delayed.

"Everybody sounds very concerned and nervous on whether or not they can get a quick resolution from this rescue package, because the longer it drags on, the more uncertainty there is and the more heartache it's going to cause the markets," said Butler.   Continued...