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DJ Canada Afternoon: Canadian Dollar Stays Put Near Par

DJ Canada Afternoon: Canadian Dollar Stays Put Near Par

By Karen Johnson DJ Newswire
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NEW YORK, Apr 07, 2010 (Dow Jones Commodities News via Comtex) --

After lingering near parity with the greenback most of the North American session, the Canadian dollar gave up some ground Wednesday as investors took profits ahead of Friday's Canadian jobs data.

The Canadian dollar reached equal footing with its U.S. counterpart on Tuesday for the first time since July 2008. It had hovered around par since then but declined late afternoon, mirroring a softening in oil and equities.

"It's probably a healthy thing," said Firas Askari, managing director and head of forex trading at Bank of Montreal in Toronto, adding that the selloff didn't appear to be drastic. "When you've had a one-way move over the course of weeks or months, as we've seen here, you're going to see some profit-taking."

On a day filled with mixed economic news, the Canadian currency made mostly gentle moves to the upside and downside.

The Canadian dollar had slumped slightly earlier Wednesday, with the U.S. Dollar trading at C$1.0035, after a retreat in oil prices and weaker-than-expected Canadian building permits data for February. Better-than-expected Ivey PMI data offered the Canadian unit a slight and brief rebound, sending it to C$0.9995 against the greenback, according to EBS via CQG.

It made no significant moves as the Organization for Economic Cooperation and Development released estimates that Canada's economic growth sped to a 6.2% annualized rate in the first quarter.

The OECD's forecast for Canada's growth far exceeds the 3.5% rate that the Bank of Canada predicted in its January Monetary Policy Report. The OECD says it expects growth to slow to 4.5% in the second quarter, still outpacing the central bank's 4.3% forecast. Canadian GDP expanded 5% in the fourth quarter of 2009, a five-year record, as a recovery began to take hold.

"We're going to see some hesitancy to move the Canadian dollar in one way or the other until we get the unemployment data," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto, adding, "that will be a good driver of direction."

Canadian Prime Minister Stephen Harper said Wednesday in Ottawa that he's more concerned about economic competitiveness than the level at which the Canadian dollar trades.

He said that Bank of Canada Governor Mark Carney has voiced concern that the economy's recovery could be mitigated if the Canadian dollar rises too far, too fast.

Harper said he's optimistic about Canada's recovery and says there are encouraging signs on job creation.

Canada's jobs data for March will be released on Friday. In a revised estimate, analysts are calling for an increase of 26,000 jobs, versus the 20,900 added in February. The numbers will hold sway as the Bank of Canada weighs interest rates.

The U.S. Dollar was trading at C$1.0048 at 4:02 p.m. EDT (2002 GMT), from C$1.0006 at 8 a.m. EDT (1200 GMT), and from C$1.0001 late Tuesday.

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