CANADA FX DEBT-C$ ends lower as equity rally fizzles

Thu Feb 19, 2009 4:41pm EST
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* C$ stages brief rally back above 80 U.S. cents

* Late selloff in equities weighs on C$

* Bond prices end down as supply concerns resurface (Recasts with comments and closing numbers)

By Frank Pingue

TORONTO, Feb 19 (Reuters) - The Canadian dollar rallied as much as 0.9 percent versus the U.S. greenback on Thursday but ended a touch lower as North American equities eased from early levels as risk appetite diminished.

A good portion of the currency's early gains came ahead of the market open, when equity futures had pointed to a much stronger open than actually happened.

The gains were not sufficient to withstand a selloff late in the day as equities fell from early highs and dragged the Canadian currency along for the ride.

"As we went through the mid-morning we saw a reversal in fortune in equities ... and I think basically that has been the main factor that has been hanging over the Canadian dollar like a cloud," said George Davis, chief technical strategist at RBC Capital Markets.

"Once the equity rally sputtered out, I think people started to get concerned again about the limited ability of the market to rally, and that basically emphasizes the fact that we are still within a bearish environment."   Continued...