C$ lower as U.S. consumer confidence weighs

Tue Jul 28, 2009 9:30pm EDT
 
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By Jennifer Kwan

TORONTO (Reuters) - Canada's dollar pulled back from a near 10-month high against the U.S. dollar on Tuesday, tugged lower by weak oil prices and retreating equities after a disappointing reading of U.S. consumer confidence.

The currency fell back after racing as high as C$1.0750 to the U.S. dollar overnight, or 93.02 U.S. cents, its highest level since October 3.

The currency fell with mostly weaker North American stocks after U.S. consumer confidence declined more than anticipated in July, while some quarterly results and forecasts sparked worries about the strength of the recovery.

"The disappointment with the U.S. consumer confidence numbers subsequently saw equity markets sell off and generally risk appetite fade back," said Shaun Osborne, chief currency strategist at TD Securities.

The Canadian currency finished at C$1.0831 to the U.S. dollar, or 92.33 U.S. cents, snapping four sessions of gains and down from C$1.0811 to the U.S. dollar, or 92.50 U.S. cents, at Monday's close.

Weak oil and metals prices also helped to tug the currency lower. Oil prices settled lower at $67.23 a barrel, dragged down by the consumer confidence data.

"Over the last two weeks, we've seen a tremendous move in the Canadian dollar higher so I think a part of it is just a natural give back," said Camilla Sutton, currency strategist at Scotia Capital.

But the underlying trend is still in the Canadian dollar's favor, added Osborne.   Continued...