Canadian dollar heads lower amid Greek bond downgrade, housing data

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Morrison, The Canadian Press, On Monday May 9, 2011, 11:58 am

TORONTO - The Canadian dollar was lower Monday at midday, losing early momentum against the greenback amid another downgrade for Greece while traders took in negative housing data.

The dollar was down 0.03 of a cent to 103.38 cents US after credit rating agency Standard & Poor's lowered Greece's bond grade further into junk status because of risks that the country will have to negotiate an extension on its debt repayments.

S&P lowered Greece's bond long-term bond grade on Monday by two notches to B from BB-, with "negative implications" for future efforts to improve public finances.

The Canadian currency also lost traction amid some negative data from the housing sector.

Canada Mortgage and Housing Corp. reported that housing starts fell to 179,000 in April, down from 185,000 and below the 183,000 level that economists had expected.

A recovery in commodity prices had earlier pushed the Canadian dollar higher after a selloff in oil and metals helped send the currency down about 2.4 cents US last week.

However, prices for oil and metals improved Monday after a solid U.S. employment report on Friday eased worries about the pace of the American economic recovery.

The U.S. economy created 268,000 jobs in April, the most since February 2006 and well above the 185,000 jobs that analysts had predicted.

Oil prices jumped as improved hopes for the U.S. economy helped lower fears of much lower demand. The June crude contract on the New York Mercantile Exchange climbed $3.04 to US$100.22 a barrel after plunging almost US$17 or 14 per cent last week.

Other commodities advanced as the June gold contract on the Nymex rose $14.20 to US$1,505.80 an ounce while the July copper contract in New York was up four cents to US$4.02 a pound.

Commodity prices tumbled last week amid higher margin levels for silver and worries about the pace of the economic recovery.