February 7, 2008 / 9:53 PM / 11 years ago

Canadian dollar ends down on global growth concern

 By Frank Pingue
 TORONTO, Feb 7 (Reuters) - The Canadian dollar closed lower
against the U.S. dollar on Thursday, given the nagging concerns
that a global economic slowdown could erode demand for the
country's key export commodities.
 Bond prices fell across the curve as investors crept back
into riskier assets like equities ahead of domestic jobs and
housing data on Friday.
 The Canadian dollar closed at C$1.0108 to the U.S. dollar,
or 98.93 U.S. cents, down from C$1.0061 to the U.S. dollar, or
99.39 U.S. cents at Wednesday's close.
 During the session the Canadian dollar bounced around in a
range of C$1.0129, or 98.73 U.S. cents, to C$1.0076, or 99.25
U.S. cents.
 If the slowdown in the U.S. economy hits the global economy
it could hurt the Canadian dollar as there would likely be
lower demand for Canadian commodities such as oil, gas and
 "We're seeing the Canadian dollar basically just fall out
of favor here, with the market still concerned about a general
recession type scenario in the States," said George Davis,
chief technical strategist at RBC Capital Markets.
 "But another thing that has sort of contributed to the move
... has been more just the broader based strength in the U.S.
dollar than anything else."
 Barring a sharp turnaround on Friday, the Canadian dollar
is on track to record its first weekly loss in three weeks as
the momentum it enjoyed after aggressive U.S. Federal Reserve
rate cuts last month appears to have faded.
 Traders will get a glimpse into the health of the Canadian
economy on Friday as job and housing figures are both scheduled
for release.
 The economy is expected to have added 10,000 jobs in
January while housing starts are expected to rise to 210,000
from 187,5000 in December, according to a Reuters poll.
 Higher oil and gold prices, which often influence the
Canadian dollar, given the nature of Canada's exports, moved
higher and helped cushion the fall in the currency.
 Canadian bond prices turned lower as the safe-haven bids
they enjoyed earlier in the week when stock markets tumbled was
reversed slightly as stock markets edged higher.
 Both the Toronto Stock Exchange's main index and the Dow
Jones industrial average ended a three-session losing streak
with gains of 58.17 points and 46.90 points respectively.
 While the key jobs and housing data will be watched
closely, some experts suggest moves could be limited, or
temporary, until the market gets a look at longer-term data.
 "You probably need to go beyond tomorrow to another month,"
said Max Clarke, an economist at IDEAglobal in New York. "You
want to have more than one month in a row of more positive data
to reverse some of the recent moves that have occurred in our
(Canadian government bonds).
 The two-year bond fell 11 Canadian cents to C$102.00 to
yield 3.096 percent. The 10-year bond dropped 61 Canadian cents
to C$100.99 to yield 3.872 percent.
 The yield spread between the two- and 10-year bond was 77.6
basis points, up from 74.7 points at the previous close.
 The 30-year bond fell C$1.46 to C$112.84 to yield 4.231
percent. In the United States, the 30-year treasury yielded
4.525 percent.
 The three-month when-issued T-bill yielded 3.27 percent,
down from 3.28 percent at the previous close.

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