Canadian dollar tumbles below 80 U.S. cents

Wed Oct 22, 2008 4:41pm EDT
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* Canadian dollar skids to mid-2005 level

* Stronger U.S. dollar and weak oil blamed for slide

* Slide in retail sales data helps boot bond prices

By Frank Pingue

TORONTO, Oct 22 (Reuters) - The Canadian dollar was whacked to its lowest level versus the U.S. dollar in more than three years on Wednesday as softer oil prices and a surge in the greenback combined to knock the currency below 80 U.S. cents.

Bond prices closed higher across the curve as the latest data out of Canada, including the August retail sales report, missed estimates, while the equity market resumed its slide and prompted investors to snap up more secure government debt.

The Canadian dollar closed at C$1.2547 to the U.S. dollar, or 79.70 U.S. cents, down 3 percent from C$1.2137 to the U.S. dollar, or 82.39 U.S. cents, at Tuesday's close.

During the session, the Canadian currency dropped as low as C$1.2600 to the U.S. dollar, or 79.36 U.S. cents, a move blamed largely on a stronger greenback as investors liquidated riskier assets. Lower oil prices also played a role.

"Stand out of the way of this freight train," said Steve Butler, director of foreign exchange at Scotia Capital. "You just cannot call an end to this move at this moment or a bottom for the Canadian dollar."   Continued...