CANADA FX DEBT-C$ slides to near-week low on China, Portugal

Wed Jul 6, 2011 4:54pm EDT
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* C$ falls to C$0.9656, or $1.0356

* China rate hike, Portugal debt spoil risk appetite

* Bond prices stronger, Canada slightly outperforms

By Trish Nixon

TORONTO, July 6 (Reuters) - Canada's dollar weakened against its U.S. counterpart on Wednesday, touching its lowest point in almost a week, after China's rate hike and a downgrade of Portugal's debt fueled buying of the safe-haven greenback.

China raised interest rates for the third time this year, making clear that taming inflation remains a top priority even as its vast economy pauses. [ID:nL3E7FK17V]

Portugal's credit downgrade by ratings agency Moody's also reignited fears about euro zone debt just as concerns over Greece ebbed. [MKTS/GLOB]

The Canadian dollar's fall reflects "ongoing risk aversion because of concerns about Europe's credit crisis," said Sal Guatieri, senior economist at BMO Capital Markets.

China's tightening also raises concerns about a hard economic landing there, which would undermine commodity prices and hurt the Canadian dollar, he said.   Continued...