C$ sells off on global growth fears

Thu Jun 21, 2012 4:22pm EDT
 
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar fell to a one-week low against its U.S. counterpart on Thursday as investor fears about slowing global growth sent equity and commodity markets sharply lower.

Surveys on Thursday showed business activity across the euro zone shrank for a fifth straight month in June and Chinese manufacturing contracted, while weaker overseas demand slowed U.S. factory growth.

The data darkened the outlook for the global economy and pushed oil prices below $90 a barrel for the first time since December 2010, while currencies of commodity-linked economies, including Canada, Australia and New Zealand sold off as investors dumped riskier investments and fled to the relative safety of the U.S. dollar. <O/R><FRX/>

"The picture is still not bright. All the economic indicators globally are down. That's the reality of the situation. People are definitely shedding risk," said John Curran, senior vice president at CanadianForex.

He said he sees the currency trading as low as C$1.0420 against the greenback in the near term.

The Canadian dollar ended the session at C$1.0293 versus the U.S. dollar, or 97.15 U.S. cents, nearly a cent down from Wednesday's finish at C$1.0192, or 98.12 U.S. cents. Earlier, the currency touched C$1.0296, its weakest against the greenback since June 13.

In another sign that Canadian second-quarter growth could be unimpressive, retail sales in April posted a surprise 0.5 percent drop from March on general weakness. Analysts had predicted a 0.3 percent month-on-month increase.

Also in the spotlight, the Canadian government tightened rules for mortgages and household borrowing on Thursday to make it harder for home buyers and homeowners to take on massive debt in an attempt to cool the still hot domestic housing market.   Continued...