Canadian dollar slides to five-month low

Thu May 31, 2012 11:57pm EDT
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By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar slumped to its weakest level against the U.S. dollar since late December on Thursday, while long-term bond yields hit record lows, as investors shunned riskier trades on signs of soft U.S. growth and worries about Spain's debt troubles.

The Canadian currency touched C$1.0366 against its U.S. counterpart, or 96.47 U.S. cents, its softest level since December 20.

The commodity-linked currency weakened after a report by private payrolls processor ADP showed U.S. private employers created 133,000 jobs in May, fewer than the expected 148,000. And new claims for unemployment benefits rose by 10,000 for the fourth straight weekly increase.

The data comes ahead of Friday's key U.S. payrolls report.

Markets were also disappointed by data that showed U.S. first-quarter growth was revised down and Midwest business activity slowed considerably.

"Risk sentiment just continues to plunge by the day," said Mazen Issa, Canada macro strategist at TD Securities. "Things were holding in fairly steady until equities opened and you saw the Canadian dollar just drop."

The S&P 500 and S&P/TSX composite index .GSPTSE both fell and were headed for their worst month since September. .TO.N

At 12:01 p.m. EDT (1601 GMT), the Canadian dollar was at C$1.0355 against its U.S. counterpart, or 96.57 U.S. cents, down from Wednesday's North American session close at C$1.0292 against the U.S. dollar, or 97.16 U.S. cents.   Continued...

The new Canadian 20 dollar bill made of polymer is displayed at the Bank of Canada in Ottawa May 2, 2012. REUTERS/Chris Wattie