Canada dollar hits one-month low, stung by "fiscal cliff" fear
By Andrea Hopkins
TORONTO (Reuters) - The Canadian dollar ended weaker after touching a one-month low against its U.S. counterpart on Thursday, as investors fled to safety after the top Democrat in the U.S. Senate said the country looked to be headed over the "fiscal cliff" of tax hikes and spending cuts.
Majority Leader Harry Reid told the Senate in a speech that "it looks like that is where we're headed.
Commodity-linked currencies like the Canadian dollar tend to benefit when U.S. budget negotiations run smoothly, but when there are snags, investor flows go into the highly liquid U.S. dollar. <MKTS/GLOB>
"Today it is about the headlines on the fiscal cliff and risk aversion and the U.S. dollar getting a bit of a safe-haven bid," said Shaun Osborne, chief currency strategist at TD Securities.
"We've had some short-end Treasury bills go negative as people move into safe havens, and I think that is an indicator of where money is going to flow as the fiscal cliff looms even larger in the next few days."
The Canadian dollar ended the North American session at C$0.9949 versus the U.S. dollar, or $1.0051, down from Monday's North American session close at C$0.9913 versus the U.S. dollar, or $1.0088.
It hit C$0.9959 earlier in the session, its weakest level since November 28. The currency pared some of its losses after the U.S. House of Representatives, in the barest sign of progress, said it would come back to work this weekend.
North American markets were closed on December 25, and most Canadian currency traders were away on Wednesday for Boxing Day, making Thursday the first day of normal trade since markets closed on Monday, Christmas Eve. Continued...