Canadian dollar drops to weakest close in six weeks

Mon Jul 28, 2008 4:45pm EDT
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By John McCrank

TORONTO (Reuters) - The Canadian dollar slipped to its weakest close in six weeks against the U.S. dollar on Monday, extending a slow slide driven by concerns about the health of the economy of Canada's biggest trading partner.

Domestic bond prices rose on the back of a safe-haven bid as concerns over the state of the financial industry had investors buying relatively stable government debt.

The Canadian dollar closed at C$1.0230 to the U.S. dollar, or 97.75 U.S. cents, down from C$1.0196 to the U.S. dollar, or 98.69 U.S. cents, at Friday's close.

The currency fell to a low of C$1.0245 against the greenback during the session, its weakest since mid-June. It has fallen 2.1 percent in the past five days, hampered by a variety of factors, such as softer oil prices, weaker-than-expected Canadian data, and some U.S. dollar strength.

"It's been a bit of a dog day for the Canadian dollar all around, said Shaun Osborne, chief currency strategist at TD Securities.

The Canadian dollar ended down pretty much across the board, more so against majors like the yen and the euro than against the greenback, which was also hurt on the crosses.

The main factor in Monday's weakness was concern over the U.S. economy, where Canada sends over 75 percent of its exports, said Osborne.

"It's still very much the case that the Canadian cart is hitched to the U.S."   Continued...