CANADA FX DEBT-C$ strengthens for 4th day, bonds mixed

Fri May 22, 2009 5:23pm EDT
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* C$ pushes to 89.38 US cents, highest level since Oct. 9

* Bonds mixed as currency gains, downgrade talk mounts (Adds details)

By Ka Yan Ng

TORONTO, May 22 (Reuters) - The Canadian dollar rose for a fourth straight session and hit a new seven-month high versus the U.S. dollar on Friday, spurred by market worries about the triple-A credit ratings of the United States.

The Canadian currency pushed as high as C$1.1188 to the U.S. dollar, or 89.38 U.S. cents, its strongest level since Oct. 9. It is up about 17 percent since hitting its lowest level in about five years in early March.

It finished at C$1.1203 to the U.S. dollar, or 89.26 U.S. cents, up sharply from C$1.1380 to the U.S. dollar, or 87.87 U.S. cents, at Thursday's close.

The ratings concern was sparked by a Standard & Poor's downward revision this week to its credit rating outlook for the United Kingdom, feeding jitters that Washington's growing deficit could lead to a similar fate for the United States. [ID:nLL180301]

Fears of a ratings cut hit U.S. assets on Thursday and continued into Friday. Moody's Investors Service said it is comfortable with its triple-A rating on the United States but said the sovereign rating is not guaranteed forever. [ID:nN21313143] Stocks managed to rebound on the comments, but the U.S. dollar and bonds remained under pressure. [MKTS/GLOB]

"It just seems the market right now has gone into this mode to sell U.S.," said George Davis, chief technical strategist at RBC Capital Markets.   Continued...