C$ back below parity Europe worries

Wed May 9, 2012 9:38am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Jennifer Kwan

TORONTO (Reuters) - Canada's dollar skidded to its lowest level in three and half months on Wednesday, back below parity against the U.S. dollar, as political disarray in Greece and the rising costs of fixing Spain's banks fueled fears about Europe's debt crisis.

The market's immediate attention was on Athens where efforts to form a government were expected to fail, putting its ability to meet the terms of its bailout deal in doubt and raising the possibility of Greece being forced out of the euro.

Meanwhile, Spain will demand banks set aside another $45 billion against loans to builders as it battles to rebuild confidence, sources told Reuters. Huge bank losses have raised fears the country may need an international bailout. (ID:nL5E8G8H7H)

Those concerns pushed the Canadian currency to C$1.0064 against the U.S. dollar, or 99.36 U.S. cents, its weakest level since January 30.

"The Canadian dollar is suffering from overall broader themes on risk aversion stemming from the power shifts in Europe," said John Curran, senior vice president at CanadianForex.

"People didn't want to believe that it would happen. It is happening -- that Europe would rear its ugly head again."

At 9:15 a.m. (1315 GMT), the currency was at C$1.0045 versus the greenback, or 99.55 U.S. cents, down from Tuesday's North American session close at C$0.9983 versus the U.S. dollar, or $1.0017.

The Canadian dollar largely underperformed its G10 currency cousins including the euro and Japanese yen, and it broke through a recent trading range of C$1.0050 against the U.S. dollar.   Continued...