CORRECTED - CANADA FX DEBT-C$ drops as M&A news triggers selloff

Wed Feb 25, 2009 4:58pm EST
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(Corrects figure in the second paragraph to U.S. dollars from Canadian, to $3.6 billion from C$3.6 billion)

* C$ rattled by news of Agrium's planned takeover

* Currency slide extends in aftermath of weak U.S. data

* Bond prices extend Tuesday slide on supply concerns (Recasts with comments and closing numbers)

By Frank Pingue

TORONTO, Feb 25 (Reuters) - The Canadian dollar skidded lower on Wednesday as soft U.S. economic data fueled risk aversion trades while a Canadian-led corporate takeover upped the likelihood of increased demand for U.S. dollars.

The bulk of the Canadian currency's 0.9 percent fall came early in the session after Canadian fertilizer company Agrium Inc (AGU.TO: Quote) launched a $3.6 billion cash and stock offer to buy CF Industries (CF.N: Quote) of the United States. [ID:N25476074]

The Canadian dollar fell further as the greenback rose on its safe-haven status after data showed the pace of existing home sales in the United States fell in January, while economists had expected a rise. [ID:nLP680404]

"There was the M&A deal that got announced midmorning and that really took the sting out of the Canadian dollar and we saw it tumble quite a bit," said Steve Butler, director of foreign exchange trading at Scotia Capital.   Continued...