Tuesday March 25, 2008 - 22:11:58 GMT
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Reuters - www.reuters.com
Forex Market News - Loonie posts small gain as U.S. worries weigh
By John McCrank
TORONTO (Reuters) - The Canadian dollar eked out a tiny
gain against the U.S. dollar on Tuesday, but fears of a
spillover from the U.S. economic slowdown kept it from gaining
more traction after domestic retail sales data came in above
Domestic bond prices rallied along with the larger U.S.
market after U.S. data painted a picture of a struggling
economy that has yet to hit bottom.
The Canadian currency closed at C$1.0173 to the U.S.
dollar, or 98.30 U.S. cents, up from C$1.0179 to the U.S.
dollar, or 98.24 U.S. cents, at Monday's close.
The currency was given a boost early in the session as
Statistics Canada said retail sales rose 1.5 percent in
January, beating estimates for a 1.2 percent gain.
But, close on the heels of those numbers, a U.S. report on
house prices came in below market expectations. That was
followed by another U.S. report showing consumer confidence
remained unchanged, but was having its worst run in 14 years.
"Certainly, the worst is not over in the U.S. for sure and
I think there still are some worries about the effect that's
going to have on Canada," said Steve Butler, director of
foreign exchange trading at Scotia Capital.
On the technical side, the currency has been unable to push
through its 200-day moving average of C$1.0226 to the U.S.
dollar, which may signal more rangebound trading in the days
and weeks to come, said Butler.
"People were more interested in buying euros than Canadian
dollars today... If we are back in the range, I think Canada is
going to get shoved aside by a lot of the players and
speculators, and we've just become a slave to the flows."
Canadian bond prices rose along with the larger U.S. market
as investors focused on the deteriorating economic situation in
the United States.
"The really soft U.S. data really seems to be dominating
the bond market on both sides of the border," said Eric
Lascelles, chief economics and rates strategist at TD
Canada's economic calendar is bare until Monday's release
of January gross domestic product figures. The key piece of
domestic data next week is the March jobs report on April 4.
The two-year bond was up 4 Canadian cents at C$102.52 to
yield 2.705 percent. The 10-year bond increased 35 Canadian
cents to C$104.05 to yield 3.480 percent.
The yield spread between the two- and 10-year bonds was
77.5 basis points, down from 79.1 points at the previous close.
The 30-year bond was up 55 Canadian cents at C$118.15 to
yield 3.947 percent. In the United States, the 30-year treasury
yielded 4.309 percent.
The three-month when-issued T-bill yielded 1.93 percent, up
from 1.68 percent at the previous close.
(Editing by Rob Wilson)
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