Canadian dollar hits four-month low on euro zone worries
By Jon Cook
TORONTO (Reuters) - The Canadian dollar tumbled to a four-month low against its U.S. counterpart on Friday as investors fretted about Spain's deteriorating finances and a possible Greek exit from the euro.
The euro plumbed a 22-month low against the U.S. dollar after the president of Catalonia, Spain's wealthiest autonomous region, said the region is running out of options for refinancing more than 13 billion euros ($16.27 billion) in debt that comes due this year.
"There's a lot of uncertainty regarding Europe, and the Canadian dollar, which is largely a play off risk sentiment, is reacting accordingly," said Mazen Issa, macro strategist at TD Securities. "With risk sentiment as bruised as it is, it's hard to see it going the other way for the moment."
The Canadian currency fell as low as C$1.0301 against the U.S. currency, or 97.07 U.S. cents, its lowest level since January 9.
Worries were compounded on Friday after Belgium's deputy prime minister, Didier Reynders, issued a warning over Greece, saying it would be a "grave professional error" if central banks and companies were not preparing for a Greek exit from the euro zone.
Greeks vote again on June 17, with polls showing a close race between parties supporting and opposing the austerity measures that are part of the terms of the country's international bailout, keeping markets on tenterhooks.
Issa saw the currency weakening further in the weeks leading up to the Greek elections, possibly re-testing December lows around C$1.04.
"It's probably going to be a little bit messy in the markets," said Issa. Continued...