CANADA FX DEBT-Risk aversion drags on C$, bonds down

Fri Mar 27, 2009 4:50pm EDT
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* C$ slides to 80.81 U.S. cents

* Currency ends flat from prior week

* Focus on BoC governor's two appearances next week (Adds details)

TORONTO, March 27 (Reuters) - The Canadian dollar fell against the U.S. currency on Friday as risk aversion grew amid weakening stock markets and the retreating price of oil.

Part of the U.S. dollar's renewed rise came at the expense of an aggressive selloff of the euro, which was pressured by comments from the German finance minister, who suggested fiscal irresponsibility in Europe could put the euro at risk. [ID:nN27517921]

The Canadian currency finished at C$1.2374 to the U.S. dollar, or 80.81 U.S. cents, down from C$1.2289 to the U.S. dollar, or 81.37 U.S. cents, at Thursday's close. It ended the week flat from the previous week.

"It does seem like, at least over the short term, that sentiment has shifted a little bit more bearish towards the Canadian dollar than what we've seen for all of this week," said George Davis, chief foreign exchange technical analyst at RBC Capital Markets.

"The performance of equity markets and the commodity markets hasn't helped either. They've had a rough day. As a result, the backdrop for the Canadian dollar hasn't been very positive today."

Crude oil dropped about 4 percent to near $52 a barrel. Canada is a major exporter of oil and the currency often tracks the commodity. The fading oil price contributed to a fall of nearly 2 percent in the Toronto Stock Exchange's resource-heavy index.   Continued...