CANADA FX DEBT-C$ weakens as oil drops, equities drag

Mon Aug 31, 2009 8:01am EDT
 
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 TORONTO, Aug 31 (Reuters) - The Canadian dollar sank
against the U.S. currency on Monday as the price of oil dropped
on weaker Chinese and European equities, stoking concerns about
the pace of economic recovery.
 The Shanghai Composite Index .SSEC, a barometer of
economic health that has recently influenced other stock
markets around the world, lost more than 6 percent. [MKT/GLOB]
[ID:nN31427833]
 "The market looks to China as an indicator of global growth
going forward," said Camilla Sutton, currency strategist at
Scotia Capital. "Any time we some evidence of weakness in
global growth going forward it does weigh on the Canadian
dollar."
 At 7:38 a.m. (1138 GMT), the Canadian dollar was at
C$1.1043 to the U.S. dollar, or 90.56 U.S. cents, down from
C$1.0919 to the U.S. dollar, or 91.58 U.S. cents at Friday's
close.
 Another factor weighing on the unit was the price of oil
CLc1, a key Canadian export, which fell toward $71 a barrel
[ID:nSYD487149], as well as general flow-driven weakness, said
Sutton.
 She added the market may draw direction from gross domestic
product data, due at 8:30 a.m. The data is expected to show the
Canadian economy has started a slow crawl back to health after
the sharpest three-quarter recession in 50 years.
[ID:nN27314779]
 Canadian bond prices were mostly higher across the curve on
Monday morning, tracking the big U.S. Treasury market where
debt prices climbed in Europe on Monday as a slump in equities
boosted safe-haven bids. [ID:nLV158024]
 (Reporting by Jennifer Kwan, Editing by Chizu Nomiyama)