CANADA FX DEBT-C$ rattled after Canada posts trade deficit

Wed Feb 11, 2009 9:10am EST
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By Frank Pingue

TORONTO Feb 11 (Reuters) - The Canadian dollar fell versus the U.S. currency on Wednesday moments after data showed Canada posted its first trade deficit in 32 years, adding to a steep slide in the currency in the previous session.

Canada had a trade deficit of C$460 million in December as exports fell at a far faster rate than imports, which was well shy of analysts estimates who forecast a surplus of C$800 million [ID:nN11]

"Globally, trade slid dramatically at the end of last year so if you're a country that tends to export a lot you are probably going to get hammered quite hard in that regard," said David Watt, senior currency strategist at RBC Capital Markets.

"The underlying story is it's a Canadian dollar-bearish story in an environment where global trade is still slowing down and the outlook for global growth is still uncertain."

Immediately after the data were released, the Canadian dollar dropped as low as C$1.2515 to the U.S. dollar, or 79.90 U.S. cents, from its pre-data level around C$1.2459 to the U.S. dollar, or 80.26 U.S. cents.

By 8:55 a.m. (1355 GMT), the domestic currency recovered a touch to C$1.2488, or 80.07 U.S. cents, which was still down from Tuesday's session close of C$1.2462, or 80.24 U.S. cents. (Editing by Tom Hals)