CANADA FX DEBT-C$ sinks as oil, equities tumble

Tue Jul 7, 2009 4:40pm EDT
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* C$ falls to close at 85.76 U.S. cents

* Weakness in oil price, stock markets pressure currency

* Bonds little changed across the curve (Adds details, quotes)

By Jennifer Kwan

TORONTO, July 7 (Reuters) - The Canadian dollar erased early gains and ended lower against the U.S. dollar on Tuesday, hurt by lower oil prices, which slid on doubts about economic recovery.

Prices for oil, a key Canadian export, dropped for the fifth straight day, with crude futures settling at $62.93 a barrel . [ID:nN07338304]

"That's really the driving catalyst in the Canadian dollar today," Charmaine Buskas, senior economics strategist at TD Securities, said of the oil price weakness.

"The fact that there are still looming concerns for the U.S. recovery suggests that we are seeing a little bit of safe-haven flow back into the (U.S.) dollar," she added. "That is also working in concert with weaker oil prices to push the Canadian dollar lower."

The retreat came despite better than expected Canadian economic data on Tuesday, Buskas said.   Continued...