CANADA FX DEBT-Canadian dollar weakens after GDP data

Fri Jan 30, 2009 10:38am EST
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* C$ dips as data shows Canada shrinks 0.7 pct in Nov

* Higher oil helps cushion Canadian dollar's drop

* Bonds higher as investors shun riskier assets

By Jennifer Kwan

TORONTO, Jan 30 (Reuters) - Canada's dollar touched its weakest in a week against the U.S. dollar on Friday as investors shunned riskier assets and data showed the economy shrank more than expected in November as recession took hold.

The Canadian currency flagged after data showing the economy shrank 0.7 percent in November, the biggest monthly drop in more than five years, suggesting more weakness in the coming months. [ID:nN30397290]

The data sets the stage for a "pretty weak" backdrop for the fourth quarter, said Charmaine Buskas, senior economics strategist at TD Securities.

"It suggests the Canadian economy is indeed facing a recession and the economy does look to be very weak for the set up of 2009," she said.

At 9:52 a.m. (1452 GMT), the Canadian dollar was at C$1.2340 to the U.S. dollar, or 81.03 U.S. cents, down from Thursday's close of C$1.2233 to the U.S. dollar, or 81.75 U.S. cents.   Continued...