CANADA FX DEBT-C$ rises for third session, bonds slide

Thu May 21, 2009 5:34pm EDT
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* C$ closes higher at 87.87 U.S. cents

* Hits 7-month high overnight, but pares gains

* Bonds fall, market awaits supply

By Ka Yan Ng

TORONTO, May 21 (Reuters) - The Canadian dollar shrugged off an bout of risk aversion and lower oil prices on Thursday, rebounding from an early slide to notch its third straight higher close.

The currency turned higher as market worries that the United States, like Britain, might run the risk of losing its coveted AAA credit rating dragged the greenback lower.

Ratings agency Standard and Poor's issued a warning on Thursday that Britain's outlook was "negative" and no longer "stable". [ID:nLL627240] [ID:nN21292647]

"Coming on the heels of S&P's credit watch on the U.K., the market is sensitive ... to rating agency issues," said Jack Spitz, managing director of foreign exchange at National Bank Financial Group.

He said the Canadian dollar was being swept up in the fray but was underperforming relative to other currencies.   Continued...