November 17, 2011 / 7:14 PM / 6 years ago

Dollar hits one-month low on European debt fears

TORONTO (Reuters) - The Canadian dollar sank against the U.S. currency for a fourth straight session on Thursday, following a sell-off in global equity and commodity prices on mounting concerns Europe’s debt crisis will spread.

The safe-haven greenback rose and commodity currencies such as the Australian, Canadian, and New Zealand dollars notched losses as investors grew frustrated the two-year old debt crisis is far from being resolved. <FRX/>

“Risk is really not trading particularly well today,” said Darcy Browne, managing director, fixed income and currencies with CIBC Capital Markets Trading.

The Canadian dollar hit a low of C$1.0296 against the U.S. dollar, or 97.13 U.S. cents, its weakest level since October 12.

The currency ended at C$1.0283 versus the greenback, or 97.25 U.S. cents, down from Wednesday’s North American session close at C$1.0229 against the U.S. dollar, or 97.76 U.S. cents. The currency has fallen more than 1.6 percent so far this week.

World stocks and oil prices fell on Thursday as a rise in Spain’s borrowing costs to almost 7 percent at an auction fed fears that the euro zone debt crisis could spread further.


In the absence of any real resolution in Europe it’s unlikely risk-sensitive currencies or commodities will have any meaningful gains in the short term, said Browne.

European developments overshadowed news that foreigners continued to invest in Canadian securities in September although at a somewhat slower pace than in August, adding a near-record amount of short-term debt instruments to their portfolios.

Canadian government bond prices were mixed.

The two-year bond fell 2 Canadian cents to yield 0.900 percent, while the 10-year bond was down 3 Canadian cents to yield 2.1 percent. The 30-year bond climbed 15 Canadian cents to yield 2.7 percent.

Editing by Jeffrey Hodgson

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