CANADA FX DEBT-C$ shaken as U.S. data spoils risk appetite

Wed May 13, 2009 4:43pm EDT
 
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* C$ hits session low of 84.89 U.S. cents

* Weak data and oil prices drive action

* Bond prices up in face of equity selloff

By Frank Pingue

TORONTO, May 13 (Reuters) - Canada's currency tumbled to its lowest level in a week on Wednesday as soft U.S. data and a skid in North American equities dimmed hopes for an economic recovery and lessened demand for perceived riskier assets.

The decline comes after the currency shrugged off previous weak news and economic data to reach its highest level in more than six months on Monday.

Late in the session on Wednesday the Canadian dollar fell as low as C$1.1780 to the U.S. dollar, or 84.89 U.S. cents. Earlier this week it rose to C$1.1476 to the U.S. dollar, or 87.14 U.S. cents, its highest level since early November.

"The Canadian dollar appreciated over the last two weeks as risk sentiment improved so we backed off today as the equity markets came off and people took profits short U.S. dollar trades," said Tyson Wright, senior foreign exchange trader at Custom House, currency services firm in British Columbia.

"The market was starting to feel like things were getting overbought and a lot of the bad news wasn't being factored into the market and was being pushed aside."   Continued...