Loonie hits 3-week low as appetite for risk fades

Wed Oct 28, 2009 3:07pm EDT
 
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar fell to its lowest level in over three weeks on Wednesday along with a drop in other commodity-linked currencies given a slide in the price of oil and concern about corporate earnings.

The price of oil, a key Canadian export whose price often influences Canada's currency, fell below $79 a barrel given a weaker equity backdrop and a stronger U.S. dollar.

That shook commodity-related currencies like Canada's as well as the Australian and New Zealand dollars.

"It's just more of a risk-off kind of appetite in the market," said David Bradley, director of foreign exchange trading at Scotia Capital.

"There's concern that there might be more weaker earnings reports coming out, that stocks are going to turn negative and so all of the risk-off trades are hitting the table at once."

At 7:35 a.m., the Canadian unit was at C$1.0764 to the U.S. dollar, or 92.90 U.S. cents, which marked its lowest level since October 5. It was also down from C$1.0661 to the U.S. dollar, or 93.80 U.S. cents, at Tuesday's close.

Domestic bond prices were sitting higher across the curve as losses in European equities helped to boost demand for lower risk government debt.

(Editing by Chizu Nomiyama)

 
<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal, April 28, 2006. REUTERS/Shaun Best</p>