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

Wed Feb 11, 2009 10:12am EST
 
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* C$ drops below 80 U.S. cents after trade data

* Canada posts first trade deficit in 32 years

* Bond prices mixed after Tuesday's sharp rally (Adds details and comments)

By Frank Pingue

TORONTO, Feb 11 (Reuters) - The Canadian dollar was pinned lower against the U.S. greenback on Wednesday after data showed Canada posted its first trade deficit in 32 years, adding to the currency's steep slide 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. Analysts had 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 was 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.   Continued...