August 11, 2008 / 9:05 PM / 12 years ago

Canadian dollar falls again as oil prices drop

 * Canadian dollar losing streak extends to 7th session
 * Housing data comes in weaker than expected
 * Bond prices finish lower after early gains squandered
 By Frank Pingue
 TORONTO, Aug 11 (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
 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
 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.
 The latest piece of Canadian data, released on Monday,
showed Canada's housing market continued to cool over the
summer. Housing starts fell 14.8 percent in July from June.
 Bond prices were boosted early by the housing data, but the
gains trickled away as the session wore on since a rally in
U.S. equities shook bonds there and influenced dealers north of
the border given the lack of any key events.
 "It seems bond markets are being buffeted by what's
happening with equities," said Ferley, who said the U.S. CPI
data due out on Thursday will be a key factor in deciding where
bond prices are heading.
 The two-year bond fell 6 Canadian cents to C$101.74 to
yield 2.750 percent. The 10-year bond dropped 12 Canadian cents
to C$105.05 to yield 3.632 percent.
 The yield spread between the two-year and 10-year bond was
105 basis points, down from 109 basis points on Friday.
 The 30-year bond fell 1 Canadian cent to C$115.99 for a
yield of 4.054 percent. In the United States, the 30-year
treasury yielded 4.607 percent.
 The three-month when-issued T-bill yielded 2.49 percent,
down from 2.48 percent at the previous close.
 (Editing by Peter Galloway)

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