Canadian dollar falls, heads to one of worst weeks

Fri Oct 3, 2008 10:32am EDT
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* Canadian dollar falls to lowest level in over a year

* Bonds slip as U.S. unemployment rate stable in September

* Focus on U.S. House vote on bailout

By John McCrank

TORONTO, Oct 3 (Reuters) - The Canadian dollar was heading toward its worst week in 38 years against the U.S. dollar on Friday as tight liquidity put a premium on the greenback and nervous investors awaited a vote in U.S. House of Representatives on a revised rescue plan for the financial sector.

Bond prices dipped as cautious optimism surrounded some U.S. employment data, which was worse than expected on the headline number, but not as bad as many feared on the unemployment rate.

At 10:14 a.m. (1414 GMT), the Canadian dollar was at C$1.0829 to the U.S. dollar, or 92.34 cents, down from C$1.0799 to the U.S. dollar, or 92.60 U.S. cents, at Thursday's close.

The currency is down 4.6 percent so far this week, its biggest weekly plunge since at least 1970, according to Thomson Reuters data. It is sitting at its weakest point since Aug. 16, 2007.

Delays in taking action on the proposed $700 billion bailout plan for the U.S. financial sector has caused a tightening in credit markets. That has put a bid to the U.S. dollar as lenders, worried about more big bank defaults and their cascading effects, hold on to their cash tightly.   Continued...