CANADA FX DEBT-C$ hits January low after trade data

Tue Jan 13, 2009 9:35am EST
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* C$ falls nearly 1 Canadian cent after trade data

* Canada trade surplus narrows more than expected

TORONTO Jan 13 (Reuters) - The Canadian dollar fell against the U.S. currency on Tuesday, hitting its weakest level this month, pressured by weaker commodity prices and data that showed the country's trade surplus narrowed more than expected.

The Canadian currency was at C$1.2296 to the U.S. dollar, or 81.33 U.S. cents, down from C$1.2154 to the U.S. dollar, or 82.28 U.S. cents, on Monday.

Statistics Canada said on Tuesday that the country's trade surplus narrowed more than expected in November to C$1.28 billion, its lowest since October 1997, due to plummeting oil prices and the resulting slide in exports. [ID:N13254064]

"It shows that the terms of trade for Canada is obviously starting to be impacted fairly significantly by the global economic slowdown, especially the slowdown we're seeing in the United States," said George Davis, chief technical strategist at RBC Capital Markets.

The Canadian currency was also pressured by a fall in the price of oil CLc1, which weakened on more signs the global economic downturn is dampening demand. [ID:nSYD384129].

Canada is a major oil producer and exporter and any movements in the price of crude often sways the Canadian currency. Oil has fallen from its peak above $147 a barrel reached in July.

"The market is still focused on the themes of risk aversion and developments in commodity markets," said Davis. "What we've seen since Friday's employment reports is an increase in risk aversion, which has pushed equity markets lower.   Continued...