CANADA FX DEBT-Recovery doubts knock C$, push bonds higher

Mon Jun 22, 2009 4:50pm EDT
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* C$ falls to lowest level since May 20

* Bonds push higher in flight to safety

* World Bank, OECD outlooks weigh (Adds details)

By Ka Yan Ng

TORONTO, June 22 (Reuters) - The Canadian dollar fell to its lowest level against the broadly firmer U.S. currency in nearly five weeks on Monday, pressured by the world economic recovery outlook and a rout in equity and commodity markets.

World stocks tumbled as caution ahead of this week's data and the U.S. Federal Reserve meeting weighed on assets seen as riskier, as did a dispiriting economic outlook from the World Bank and Organisation for Economic Co-operation and Development. [ID:nSP494174]

Toronto's main equity index slumped more than 4 percent on lower commodity prices. Movements in stock markets are typically a gauge of investors' appetite for risk, particularly for the commodity-linked Canadian dollar. The price of oil, a key Canadian export, fell below $67 a barrel. [ID:nSYD456749]

The Canadian dollar finished at C$1.1526 to the U.S. dollar, or 86.76 U.S. cents, down sharply from C$1.1351 to the U.S. dollar, or 88.10 U.S. cents at Friday's close.

"We saw just a classic sharp drop in risk appetite across global markets today, across stocks, commodities, some of the non-U.S. dollar currencies, right back into Treasuries and the U.S. dollar," said Doug Porter, deputy chief economist at BMO Capital Markets.   Continued...