CANADA FX DEBT-C$ weighed down by weak domestic GDP report

Fri Jan 30, 2009 5:07pm EST
 
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* C$ hits one-week low after weak GDP data

* Currency stages late rebound as oil prices rise

* Bond prices finish mixed, supply concerns remain

By Frank Pingue

TORONTO, Jan 30 (Reuters) - The Canadian dollar fell versus the U.S. dollar on Friday, after data showed Canada's economy shrank more than expected in November, reinforcing expectations of another interest rate cut in March.

The Statistics Canada report showed the economy shrank 0.7 percent in November, the biggest monthly drop in over five years, which rattled the currency early in the session. Despite an afternoon rally, it was never able to fully recover.

The Canadian dollar closed at C$1.2265 to the U.S. dollar, or 81.53 U.S. cents, down from Thursday's close of C$1.2233 to the U.S. dollar, or 81.75 U.S. cents.

While still lower, it managed to finish comfortably above the one week low of C$1.2425 to the U.S. dollar or 80.48 U.S. cents, that it touched moments after the GDP report.

"A report like that reinforces expectations for the Bank of Canada to cut on March 3, and we're sticking to our call that they cut 50 basis points and leave their rate on hold for a long time," said Derek Holt, an economist at Scotia Capital.   Continued...