CANADA FX DEBT-C$ dives to 5-1/2 year low as U.S. crude sinks below $48
* Canadian dollar ends at C$1.1828 or 84.55 U.S. cents * Bond prices higher across the maturity curve By Solarina Ho TORONTO, Jan 6 (Reuters) - The Canadian dollar marked its weakest close against its U.S. counterpart since May 2009 on Tuesday, undercut by crude prices that were beaten down for a fourth straight session on deepening concerns about excess supply around the world. Crude prices have fallen nearly 10 percent this week, hitting fresh 5-1/2 year lows as Saudi Arabia cut selling prices to Europe and major producers showed no signs of scaling back production despite a supply glut. U.S. prices closed at $47.93 a barrel on Tuesday. Canada is a major oil exporter and its currency has been pummeled alongside crude prices, which have plummeted more than 50 percent over the past six months. "I think it's a general flight-to-quality story into the U.S. market ... The oil story does make it a more challenging environment for the Canadian dollar," said David Tulk, chief Canada macro strategist at TD Securities. "(It adds) to the fears that the only way the Canadian economy can do well is if the currency keeps pace with the weakness in the price of oil." The Canadian dollar, which lost about 9 percent last year largely on oil, ended at C$1.1828 to the U.S. dollar, or 84.55 U.S. cents, weaker than Monday's Bank of Canada close of C$1.1749, or 85.11 U.S. cents. The loonie was also underperforming most other major currencies. Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London, said the loonie could retreat as far as C$1.1950 to the greenback in the very near term as investors cast their eye toward key economic data this week, including Canada's trade balance for November, which is due on Wednesday, and Canadian and U.S. employment data for December on Friday. Canadian government bond prices were higher across the maturity curve, with the two-year up 5 Canadian cents to yield 0.956 percent and the benchmark 10-year climbing 47 Canadian cents to yield 1.637 percent. (Editing by Peter Galloway)
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