CANADA FX DEBT-C$ falls as global equities weaken

TORONTO, June 25 (Reuters) - The Canadian dollar dropped versus the U.S. dollar on Thursday morning, pressured in part by weakness in global equities and lingering caution from the U.S. Federal Reserve announcement in the previous session.

Another factor pressuring the currency were stop loss orders as well as a market that was less liquid than usual, said Firas Askari, head of foreign exchange trading at BMO Capital Markets.

“I think the Canada (dollar) just has some weak Canadian dollar longs that are getting stopped out,” he said.

At 7:38 a.m. (1138 GMT), the Canadian dollar was at C$1.1604 to the U.S. dollar, or 86.18 U.S. cents, down from Wednesday’s finish at C$1.1525 to the U.S. dollar, or 86.77 U.S. cents. At one point, the Canadian unit fell as low as 85.92 U.S. cents.

World stocks slipped on Thursday after the Fed cautioned the U.S. economy would remain weak for a time [MKTS/GLOB], while U.S. stock index futures pointed to a flat open. [ID:nN25253178]

Typically, equity markets are seen as a gauge of investors’ risk appetite.

The drop extends the currency’s descent on Wednesday after the U.S. Federal Reserve said it would keep interest rates unchanged and removed a reference about its concern that inflation could run below desired levels.

Concluding a two-day meeting, the U.S. central bank said it had decided to hold overnight interest rates in a zero to 0.25 percent range -- the level reached in December -- and repeated they would likely stay unusually low for some time. [ID:nTRT000372]

Canadian bond prices were slightly higher across the curve, following their U.S. counterparts in Europe on Thursday after investors digested the implications of the Fed’s latest policy meeting and eyed a seven year note auction later in the session. [ID:nLP074805] (Reporting by Jennifer Kwan; Editing by Theodore d’Afflisio)