Canadian dollar knocked to 1-week low by Libya revolt

Tue Feb 22, 2011 4:47pm EST
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By Claire Sibonney

TORONTO (Reuters) - Canada's currency weakened to its lowest level in more than a week against the U.S. dollar on Tuesday, succumbing to a broad sell-off in riskier assets over a revolt in Libya, despite a surge in oil prices.

World stocks and growth-related currencies tumbled amid the turmoil, as Libya declared force majeure on all oil product exports and leader Muammar Gaddafi vowed to die in his country as a martyr.

The uncertainty over Mideast supplies drove oil prices to 2-1/2 year highs and currencies such as the Swiss franc, yen and greenback benefited from safe-haven demand.

"The rise in crude pricing was of net benefit to the C-dollar, but ultimately the global macro factors that are now influencing a number of currencies ... contributed to bids in dollar/Canada," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

The Canadian dollar fell as low as C$0.9919 to its U.S. counterpart, or $1.0082, its weakest since February 11.

Spitz said heavy stop-loss orders were taken out around C$0.9890 to C$0.9900. The next key areas of support for the Canadian currency are eyed around C$0.9965, followed by C$0.9988 and C$1.0040 on the other side of parity.

Market players were also digesting Canadian retail sales for December, which dropped by 0.2 percent in December, although November's strong growth was revised up by the same amount.

The report, the only major domestic release for the week, is one of the last key pieces of data ahead of the Bank of Canada's March 1 policy-setting decision.   Continued...