CANADA FX DEBT-C$ weakens as oil drops, greenback firms

Mon Jan 19, 2009 11:00am EST
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* Canadian dollar weakens as oil drops below $35

* Bonds lower on optimism bank bailouts will ease credit

By Jennifer Kwan

TORONTO, Jan 19 (Reuters) - The Canadian dollar weakened against the U.S. currency on Monday, as the price of oil fell on easing supply concerns and as the greenback got support from a sullen economic picture in Europe.

Canadian bond prices were lower across the board on optimism that recent international measures to prop up banks will ease credit conditions and help improve the global economic picture.

Trading was expected to be lackluster as U.S. markets were closed for the Martin Luther King holiday, analysts and strategists said.

At 10:23 a.m. (1523 GMT), the Canadian currency was at C$1.2562 to the U.S. dollar, or 79.61 U.S. cents, down from C$1.2480 to the U.S. dollar, or 80.13 U.S. cents, on Friday.

The commodity-linked Canadian dollar fell as the price of oil dropped to below $35 a barrel. Concerns over crude supplies eased on signs of a resolution in the gas dispute between Russia and Ukraine and on the ceasefire in Gaza. [ID:nSP387382].

Weakness in the Canadian currency was also fueled by firmness in the U.S. dollar, which was buoyed by safe-haven buying.   Continued...