Loonie slides against stronger greenback

Thu Jul 24, 2008 5:21pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar fell 0.3 percent against a stronger U.S. dollar on Thursday, as weak data out of Europe had investors buying greenbacks, with a sharp drop in equities adding to the negative atmosphere.

Domestic bond prices rallied on a flight to safety, partly due to the steep losses on stock markets as well as on weak U.S. economic data.

The Canadian currency closed at C$1.0133 to the U.S. dollar, or 98.69 U.S. cents, down from C$1.0103 to the U.S. dollar, or 98.98 U.S. cents, on Wednesday.

The currency is down 0.7 percent against the greenback so far this week.

"Most of the Canadian dollar weakness you've seen has really been in sympathy with other currencies, such as the euro and the Australian dollar, weakening off over the last two or three days as well," said Shane Enright, currency strategist at CIBC World Markets.

Rafts of data out of Europe have shown a softening economic performance, which has cooled expectations of higher interest rates there and taken the steam out of the euro.

"The U.S. dollar sort of took its licks early in the cycle," because of weak economic numbers, Enright said. He added that other countries were now "getting deteriorating data, so you're starting to see them get punished."

Also hurting the Canadian currency was a decline of over 300 points on Toronto Stock Exchange, driven by worries over the U.S. economic outlook, which prompted investors to cash in profits on financial stocks.   Continued...

<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal in this April 28, 2006 file photo. REUTERS/Shaun Best</p>