CANADA FX DEBT-U.S. data, Europe fears drag on C$

Tue Feb 14, 2012 9:43am EST
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* C$ falls to C$1.0001 vs US$, or 99.99 U.S. cents

* Bond prices track U.S. Treasuries higher

By Claire Sibonney

TORONTO, Feb 14 (Reuters) - The Canadian dollar eased against its U.S. counterpart on Tuesday, falling back through parity on the back of weaker than expected U.S. economic data and persistent uncertainty about the outcome of Europe's debt crisis.

Data showed U.S. retail sales rose less than forecast in January as consumers cut back on car purchases and did less online shopping.

The release further weighed on fragile risk sentiment after Moody's put the United Kingdom's Aaa rating in jeopardy for the first time late Monday and warned it may cut France and Austria as well. Moody's also downgraded six euro-zone nations, including Spain and Italy.

Positive market reaction from German data suggesting that Europe's bulwark economy is picking up pace and a successful Italian bond auction was short-lived.

"The Canadian dollar is reacting to the general (U.S.) dollar move. It's caught a bit of a bid tone here in the start of the North American trading session," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets.

Risk from the euro zone remained in the forefront of investors' minds as Greece's government rushed to find 325 million euros in budget cuts to satisfy euro zone finance ministers deciding whether to sign off on a rescue package to save the country from a chaotic default.   Continued...