Friday March 28, 2008 - 21:52:21 GMT
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Reuters - www.reuters.com
Forex Market News - Canada dollar sags on commodities, bonds mixed
By John McCrank
TORONTO, March 28 (Reuters) - The Canadian dollar ended
lower against the U.S. dollar on Friday as commodity prices
fell and worries persisted about the health of the U.S. economy
and the potential for spillover effects on Canada.
Canadian bond prices ended mixed, but mostly higher, as
investors squared their books ahead of month's end.
The Canadian currency closed at C$1.0215 to the U.S.
dollar, or 97.90 U.S. cents, down from C$1.0184 to the U.S.
dollar, or 98.19 U.S. cents, at Thursday's close.
For the week, the Canadian dollar eked out a 0.002 percent
The currency has been unable to attract the attention of
buyers, despite robust prices for commodities, which make up
roughly half of Canadian exports. Commodity prices were lower
on Friday, but remained near recent record highs.
The range-bound Canadian dollar has been shackled by fears
that a deep U.S. downturn could hurt demand for commodities and
derail Canada's economic growth.
BMO Capital Markets pointed out in a note to clients that
according to the IMF, each percentage point decline in U.S.
growth reduces Canadian GDP by one-half to three-quarters of a
percent due to weaker exports and lesser funding, as Americans
provide about one-quarter of the capital raised by Canadian
Canadian exports in the fourth quarter plunged the most
since the 2001 U.S. downturn.
With the Canadian dollar sticking stubbornly around parity
with the greenback, and U.S. demand evaporating, trade will
remain a heavy anchor on growth this year, the note said.
The United States takes over 75 percent of Canadian
Looking ahead to next week, January's Canadian gross
domestic product report on Monday and March jobs reports in
Canada and the United States on Friday have the potential to
push the Canadian dollar out of its recent range, said George
Davis, chief technical strategist at RBC Capital Markets..
"On Monday we've got GDP and that should be fairly
significant given the context of the slowdown in the U.S."
"I think to a certain extent, a lot of the key numbers
we've seen here in Canada have shown a much more resilient
economy north of the border, so that number will be relevant in
Bond prices ended the session mixed as investors squared
their books heading into month's end and ahead of next week's
The lack of data led to a quiet session, but next week, the
GDP and employment reports, should shake things up, said Max
Clarke, economist at IDEAglobal in New York.
"What most people will be looking for will be the
employment data, particularly the U.S. number and I think
people are setting up for that."
The two-year bond dipped 1 Canadian cent to C$102.70 to
yield 2.580 percent. The 10-year bond rose 10 Canadian cents to
C$104.28 to yield 3.450 percent.
The yield spread between the two- and 10-year bonds was
87.0 basis points, down from 88.7 points at the previous
The 30-year bond was up 32 Canadian cents at C$117.95 to
yield 3.954 percent. In the United States, the 30-year Treasury
yielded 4.313 percent.
The three-month when-issued T-bill yielded 1.90 percent, up
from 1.78 percent at the previous close.
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