CANADA FX DEBT-C$ hit by falling oil price, bonds rise

Fri Mar 27, 2009 9:54am EDT
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* Oil falls more than 4 percent

* Currency pares losses after U.S. consumer spending data

* Bonds firm ahead of Fed purchase

TORONTO, March 27 (Reuters) - The Canadian dollar weakened against the U.S. currency on Friday, hurt by falling oil prices.

Crude oil dropped more than 4 percent to near $52 a barrel. Canada is a major exporter of oil and often tracks the rise and fall of the commodity.

At 9:30 a.m. (1430 GMT), the Canadian currency was at C$1.2368 to the U.S. dollar, or 80.85 U.S. cents, down from C$1.2289 to the U.S. dollar, or 81.37 U.S. cents, at Thursday's close.

"We've had quite a rapid decline in oil prices this morning. It's been a persistent march downward, and in turn I think that's probably a main factor pulling the commodity currencies down," said Eric Lascelles, chief economics and rates strategist at TD Securities.

Lately, equity and commodity markets have served as a barometer of risk sentiment for the Canadian dollar. But neither market has been able to convincingly pull the currency out of the C$1.22-C$1.24 range it has been hemmed into all week.

The currency pared losses from a low of C$1.2412 to the U.S. dollar hit earlier in the morning as data showed U.S. consumer spending rose for a second straight month in February, in line with market expectations. [ID:nN27544329]   Continued...