January 22, 2009 / 2:16 PM / 12 years ago

CANADA FX DEBT-C$ weakens as oil falls, economic data hits

* C$ drops as price of oil retreats to around $43 a barrel

* Canada Nov retail sales drop by most since 1998

By Jennifer Kwan

TORONTO, Jan 22 (Reuters) - The Canadian dollar weakened against the U.S. currency on Thursday as the price of oil retreated and data on both sides of the border portrayed a gloomy economic picture.

At 9:00 a.m. (1400 GMT), the currency was at C$1.2695 to the U.S. dollar, or 78.77 U.S. cents, down from C$1.2558 to the U.S. dollar, or 79.63 U.S. cents.

The price of oil CLc1, which fell to around $43 a barrel, helped to pressure the currency, given Canada’s position as a major energy producer.

The currency was also hit by a string of economic data released on Thursday on both sides of the border and overseas, most notably worse-than-expected Canadian retail sales data in November that showed a steep decline [ID:nN22], said David Watt, senior currency strategist RBC Capital Markets.

Shortly after the release of the retail sales data, the dollar hit a low of C$1.2728 to the U.S. dollar.

In the U.S., data showed that weekly jobless claims rose more than expected while housing starts and permits cratered to a record low in December.

Altogether, the data reminded people of the “cold hard facts” of the current economic downturn, said Watt.

“It’s a bad environment for any cyclical sensitive currency,” he said.

The drop comes after the unit ended stronger on Wednesday, rallying from a six-week low against the U.S. currency, boosted by a rise in the price of oil and as investors returned to riskier assets.

Canadian government bond prices were largely higher across the curve. (Editing by Jeffrey Hodgson)

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