CANADA FX DEBT-C$ skids to 6-wk low on global debt woes
* C$ hits low of C$1.0419 vs US$, or 95.98 U.S. cents
* Weakest level since Oct. 7
* Bond prices climb across curve (Adds details, comments)
By Jennifer Kwan
TORONTO, Nov 21 (Reuters) - The Canadian dollar skidded to a six-week low against the U.S. dollar on Monday as fears about government debt and deficits on both sides of the Atlantic prompted another global selloff in riskier assets in an already fragile market.
In the United States, a congressional "super committee" failed to agree on deficit-cutting measures. Washington's most ambitious effort in years to come to grips with its mounting debt is set to end with a whimper on Monday with negotiators expected to announce they have failed to reach a deal. [ID:nN1E7AK00C]
In Europe, the risk premiums on Spanish, Italian, French and Belgian government bonds rose as investors fled to safe-haven German bonds, while European shares fell more than 2 percent after Moody's warned that France's credit outlook could come under threat. [GVD/EUR] [ID:nL5E7ML0Q5] [ID:nL5E7ML0SG]
"What we have is a generally risk-off environment with oil and gold moving lower," said Camilla Sutton, chief currency strategist at Scotia Capital. "It suggests it's a move on risk aversion and potentially some flow on the back of it."
At 11:30 a.m. (1630 GMT), the Canadian dollar CAD=D4 stood at C$1.0386 against the U.S. dollar, or 96.28 U.S. cents, down a penny from Friday's North American close at C$1.0272, or 97.35 U.S. cents.
So far in the session, the currency has swung from a low of C$1.0419 to the greenback, or 95.98 U.S. cents, to C$1.0270, or 97.37 U.S. cents.
"We've certainly broken pretty violently out of range today," said Sutton. "From here, it gets more psychological than anything."
"We're in a very volatile environment right now and I think the outlook for Europe is deteriorating fairly rapidly, and I think that it's playing havoc with risk aversion."
Psychological levels of C$1.05 and C$1.06 would be key levels to focus on, she added.
David Watt, senior currency strategist at RBC Capital Markets, noted the greenback would be doing even better if it wasn't for the U.S. super committee issues.
"It's really hard to generate a lot of enthusiasm for the U.S. dollar, so people seem to be holding their nose and buying it at the present time or holding their nose and buying everything else," he said.
Canadian government bond prices rose alongside U.S. Treasuries on safe-haven demand. [US/] The two-year bond CA2YT=RR added 3 Canadian cents to yield 0.889 percent, while the 10-year bond CA10YT=RR gained 30 Canadian cents to yield 2.097 percent. (Editing by Rob Wilson)
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