Dollar falls as anxiety about Europe mounts
By Jennifer Kwan
TORONTO (Reuters) - The Canadian dollar closed lower against the U.S. currency on Wednesday, but above the one-month low it hit earlier in the day, as concerns that the euro zone debt crisis is spreading kept investors away from risk assets.
That worry also pushed down global equity markets and the euro as the European Central Bank's purchases of sovereign debt failed to stem a selloff of euro zone bonds or to calm fears that the debt crisis is expanding. <MKTS/GLOB>
The euro fell to five-week lows against the dollar and the yen as rising French and Italian borrowing costs heightened concerns about euro-zone debt crisis contagion. <FRX/>
As well, sentiment was hurt by a statement released by Fitch rating agency that said U.S. banks have manageable direct exposure to stressed European markets, but that further contagion would pose a serious risk.
"There's been a give-up in equities and a give-up on risk-related currencies ... predominantly on the statements made by Fitch," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
"The concern is of course that the contagion effect can happen not only in Europe but across the pond as well."
The Canadian dollar finished the session at C$1.0229 against the U.S. dollar, or 97.76 U.S. cents, down from Tuesday's North American close of C$1.0208 against the greenback, or 97.96 U.S. cents.
It was a volatile day for the Canadian dollar as it swung from a low of C$1.0290 early in the session to a high of C$1.0172. It hit the high on the back of a spike in oil prices above $100 a barrel. <O/R> Continued...