CANADA FX DEBT-C$ rattled as risk aversion boosts greenback

Wed Feb 25, 2009 10:54am EST
 
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* C$ gets slapped in aftermath of weak U.S. data

* Slide in C$ cushioned by rally in oil prices

* Bond prices extend Tuesday slide on supply concerns (Recasts with comments and further drop in C$)

By Frank Pingue

TORONTO, Feb 25 (Reuters) - Canada's dollar tumbled to its lowest level since last week versus the greenback at midmorning on Wednesday in a swift move after weak U.S. economic data and falling equities fueled risk aversion trades.

With no key Canadian economic data due until the end of the week, the moves in the currency were being dictated largely by the direction in its U.S. counterpart, which took off on its safe-haven status after data showed the pace of existing home sales in the United States fell in January. [ID:nN25480760]

That data came as North American equities were pinned lower by nagging concerns about the fate of the U.S. banking sector.

"Markets are reacting to news, whether it's economic news or whether it's risk aversion trending by virtue of equity markets that are melting down right now," said Jack Spitz, managing director of foreign exchange at National Bank of Canada.

"It's all contributing to a bid to risk averse currencies favoring the U.S. dollar and that itself is underlying the bid in dollar/Canada."   Continued...