The loonie eased to the US dollar and euro Monday, pausing from its recent uptrend amid speculation that the Canadian currency was somewhat overbought. The loonie declined despite more positive economic news from Ottawa. Statistics Canada reported Monday morning that the nation's index of leading economic indicators rose 0.4 percent in September, beating economists' forecasts of a 0.3 percent increase. Canada's Minister of Finance Jim Flaherty announced on Monday that Ottawa will not introduce a national security test for foreign buyouts of Canadian companies until next year, at the earliest. While Conservative leaders are pushing for stricter regulation of takeovers by state-owned foreign companies, they have stated that Canadian firms already in negotiations with foreign buyers would not be subject to the new rules. Flaherty also spoke on Liberal Stephane Dion's promise to cut corporate taxes, maintaining that the Conservatives will stick by their plan to slash corporate taxes by over 18 percent within 4 years. Flaherty was reponding to Dion's pledge to "go deeper than the Conservatives have done with their reduction to 18.5 per cent in 2011." The loonie lost ground to the US dollar Monday, pulling back from an early 31-year peak near the 0.97 mark. The Canadian currency fell to .9770 versus the greenback, down from its 1976 high of .9705, reached at around 3 am ET. Traders were looking ahead to Tuesday's data on US industrial production for September. It measures the physical output of the nation's factories, mines and utilities and is weighed heavily by the Fed in making its call on interest rates. The loonie gave back its gains from the previous session against the euro, moving away from a 16-month high. The Canadian dollar rose to 1.3765 in Asian trading, but fell to 1.3870 by 2:30 pm ET Monday.
October 15, 2007 2:40 PM