Tuesday April 15, 2008 - 21:08:38 GMT
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Reuters - www.reuters.com
Forex Market News - Canada dollar ekes out gain in lackluster session
By Frank Pingue
TORONTO, April 15 (Reuters) - The Canadian dollar closed
flat versus the U.S. dollar on Tuesday in a lackluster session
in which the positive impact of record high oil prices was
erased by nagging concerns about the U.S. economy.
Bond prices, with no Canadian data to consider, finished
lower across the curve as the latest data from the United
States suggested further interest rate cuts there may not be as
large as some analysts have forecast.
The Canadian dollar closed at C$1.0191 to the U.S. dollar,
or 98.13 U.S. cents, up from C$1.0196 to the U.S. dollar, or
98.08 U.S. cents, at Monday's close.
Much of the currency's gain was attributed to a rally in
oil prices to a record high near $114 a barrel, which helped
lift the Canadian dollar since Canada is a key producer and
exporter of oil.
But holding the Canadian dollar back from making a bigger
run against the greenback was a rather tempered gain in U.S.
equity markets, which have had a close link to the currency's
performance in recent months.
"The rally in the oil prices supported the Canadian dollar
somewhat today, but as we've seen seen of late the Canadian
dollar has been much more driven by changes in equity markets,"
said Matthew Strauss, senior currency strategist at RBC Capital
"There was not any indication that the market has more
confidence in the U.S. economy or more confidence in the global
economy ... what we need is a good half- or 1-percentage point
increase (in the Dow Jones industrial average), which could
potentially indicate sentiment change."
The Toronto Stock Exchange's main index jumped 112 points
on Tuesday, and the Dow Jones industrial average .DJI ended
60 points higher, but a good chunk of its O.49 percent gain was
recorded in the session's closing minutes.
Investors will get a fresh dose of Canadian data on
Wednesday as February's survey of manufacturing is scheduled
for release. That will be followed by the more closely watched
consumer price index data for March due out on Thursday.
Canadian bond prices ended lower due largely to economic
data out of the United States that showed accelerating producer
price inflation and caused bond investors to pare bets for Fed
U.S. data showed a bigger-than-expected rise in producer
prices, and the New York Fed manufacturing index came in much
higher than consensus expectations, reducing the safe-haven
appeal of government debt.
"Perhaps the bond market is getting a little worried about
inflation," said Carlos Leitao, chief economist at Laurentian
Bank of Canada in Montreal. "That was reinforced by the strong
PPI number in the U.S."
The two-year bond fell 14 Canadian cents to C$102.12 to
yield 2.715 percent. The 10-year bond dipped 53 Canadian cents
to C$102.85 to yield 3.629 percent.
The yield spread between the two- and 10-year bonds was
91.4 basis points, down from 91.4 at the previous close.
The 30-year bond slid C$1.03 to C$114.47 to yield 4.140
percent. In the United States, the 30-year Treasury yielded
The three-month when-issued T-bill yielded 2.42 percent, up
from 2.38 percent at the previous close.
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