October 27, 2008 / 1:59 PM / in 12 years

CANADA FX DEBT-C$ hits lowest level since September 2004

 * Dark global economic outlook weighs on Canadian dollar
 * Oil prices touch 17-month low to add to currency's drop
 * Bond prices rally on safe-haven reputation
 By Frank Pingue
 TORONTO, Oct 27 (Reuters) - The Canadian dollar fell to its
lowest level in more than four years versus the U.S. dollar on
Monday as nagging doubts about the global economy outlook
weighed on the commodity-linked currency.
 Canadian bond prices were higher right across the curve as
still-panicked investors unloaded riskier assets in favor of
more secure government debt.
 At 9:40 a.m. (1440 GMT), the Canadian unit was at C$1.2830
to the U.S. dollar, or 77.94 U.S. cents, down from C$1.2729 to
the U.S. dollar, or 78.56 U.S. cents, at Friday's close.
 Earlier, the Canadian dollar fell to C$1.2944 to the U.S.
dollar, or 77.26 U.S. cents, its lowest level since September
 The Canadian currency is now down 17 percent in October as
fears of a global recession show no signs of letting up soon.
 "We know the global economy is going to slow down and now
we're just trying to figure out how far down it's going to end
up being," said David Watt, senior currency strategist at RBC
Capital Markets.
 "Until we get signs that there is reason to be optimistic
we're not going to see people stepping back into anything that
has even a hint of risk, and Canada is exposed to the global
economy, which is right now inherently risky."
 Canada is a key exporter of many key commodities, and any
global slowdown will cut demand and leave the Canadian dollar a
victim to selloffs.
 Oil prices did not give any support for the Canadian dollar
as they tumbled below $62 a barrel to a 17-month low, while
many other commodity prices followed the slide.
 With no Canadian economic data due until later in the week,
the currency's direction until then will likely be dictated by
overall market sentiment.
 The Canadian industrial product price index and raw
materials price index for September will be released on
Thursday, followed by Friday's gross domestic product report by
industry for August.
 Canadian bond prices all moved higher as concerns about the
global economy were enough to prompt investors to unload stocks
and other risky investments in favor of safer bonds.
 The Toronto Stock Exchange's main index and the Dow Jones
industrial average both fell more than 2 percent at the open on
 The Canadian overnight Libor rate LIBOR01 was 2.2500
percent, unchanged from Friday.
 Friday's CORRA rate CORRA= was 2.2609 percent, down from
2.2622 percent on Thursday. The Bank of Canada publishes the
previous day's rate at around 9 a.m. daily.
 The two-year bond rose 6 Canadian cents to C$101.38 to
yield 2.072 percent. The 10-year bond was up 27 Canadian cents
at C$105.20 to yield 3.603 percent.
 The yield spread between the two-year and the 10-year bond
moved to 164 basis points from 160 at the previous close.
 The 30-year bond was up 40 Canadian cents at C$115.00 to
yield 4.103 percent. In the United States, the 30-year Treasury
yielded 4.019 percent.
 (Editing by Peter Galloway)

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