CANADA FX DEBT-C$ touches 1-month low on weak data, equity slide

Fri Feb 27, 2009 4:41pm EST
 
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* C$ closes below 79 U.S. cents as equities tumble

* Canada's current account swings to deficit in Q4

* Bond prices rally as weak data sparks interest (Adds comments and closing numbers)

By Frank Pingue

TORONTO, Feb 27 (Reuters) - Canada's currency fell sharply on Friday, touching its weakest level in over a month, hurt by safe-haven flows to the greenback and data that showed the country's first current account deficit in nearly a decade.

A fall in the price of oil, a key Canadian export, after a three-day bull run also contributed to knocking the Canadian dollar to its third straight weekly decline.

But domestic data that showed current account plunged into deficit in the fourth quarter took the bulk of the blame for the currency's latest selloff versus the U.S. dollar.

"The size of the current account deficit as well as the revision to the previous quarter drove home the implications of the weaker commodity prices we have seen," said Mark Chandler, fixed income strategist at RBC Capital Markets. "That and the flight to the U.S. dollar were the primary factors behind the Canadian dollar's fall."

Canada's current account deficit for the fourth quarter of C$7.49 billion was wider than the C$4.85 billion deficit forecast by analysts. [ID:nN27334437]   Continued...