CANADA FX DEBT-C$ slides to weakest since March, parity in sight

Mon Aug 8, 2011 4:42pm EDT
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* Drops to C$0.9909 to the US$, or $1.0092

* Touches weakest since March 17, traders eye US$ parity

* Bond prices jump as investors continue to exit risk

By Andrea Hopkins

TORONTO, Aug 8 (Reuters) - Canada's dollar dropped more than a cent to a near five-month low against the U.S. currency on Monday, on rising fears of a U.S. recession exacerbated by the United States' loss of its triple-A credit rating.

The currency was caught up in a wave of selling that saw U.S. stocks plunge more than 6 percent as investors fled to the safety of gold and bonds. [MKTS/GLOB]

And analysts warned falling equity markets and energy prices could drive the commodity-linked Canadian currency even lower in the week ahead, perhaps even to equal footing with the U.S. greenback.

The Canadian and U.S. currencies were last equal in February.

"If there are continued moves such as we've seen in every other asset class, parity here we come by week-end," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets.   Continued...