CANADA FX DEBT-C$ falls on auto industry worries, bonds up

Fri Dec 12, 2008 10:47am EST
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* Canadian dollar falls, underperforms on the crosses

* Auto industry in Canada and United States in focus

* Bonds up, U.S. retail sales wilt for 5th month in a row

TORONTO, Dec 12 (Reuters) - The Canadian dollar fell against the U.S. dollar on Friday, handing back some of the Thursday's hefty 2 U.S. cent gain, as the survival of the North American auto industry was put in question by the failure of a bailout package for the industry in Congress.

Canadian bond prices rose on weak retail sales data in the United States.

At 10:40 a.m. (1540 GMT), the Canadian dollar was at C$1.2410 to the U.S. dollar, or 80.58 U.S. cents, down from C$1.2337 to the U.S. dollar, or 81.06 U.S. cents, at Thursday's close.

The Canadian currency lost ground as the U.S. dollar trimmed losses after the White House said it may help the auto sector by tapping into part of a $700 billion financial sector rescue package, after a proposed bailout for the auto industry failed in the U.S. Senate on Thursday. [ID:nN12436483]

In Canada, where automakers are also looking for aid, the Canadian government said it is open to helping the ailing industry. [ID:nN12441314]

Because the auto industry woes affects both countries, it may be more useful to look at cross rates, said Adam Cole, global head of currency strategy at RBC Capital Markets in London.   Continued...