TORONTO, March 30 (Reuters) - The Canadian dollar weakened against the U.S. currency on Monday as renewed trouble in the U.S. auto sector diminished investors’ risk appetite.
World stocks slumped and government bonds rose on Monday on concerns General Motors Corp (GM.N) and Chrysler were edging closer to bankruptcy as their turnaround plans were rejected. Concerns about the banking sector in Europe also hit sentiment. For more see [ID:nLU230709] and [ID:nN29520526].
At 7:27 a.m. (1127 GMT) the Canadian dollar was at C$1.2487 to the U.S. dollar, or 80.08 U.S. cents, down from Friday’s finish at C$1.2374 to the U.S. dollar, or 80.81 U.S. cents.
At one point on Monday, the unit was at C$1.2537 to the U.S. dollar, or 79.76 U.S. cents.
The U.S. dollar is benefiting from “flight-to-safety buying,” which is the main factor pushing down the Canadian unit, said Sal Guatieri, senior economist at BMO Capital Markets.
“There’s fears of GM and Chrysler’s possible bankruptcy,” he said.
Guatieri added the stronger U.S. dollar was also helping to pressure the price of oil, which fell below $51 a barrel on Monday amid the slump in global equity markets. [ID:nSYD421224] Canada is a major exporter of oil.
Government bond prices were mostly higher across the curve, following U.S. Treasury debt prices higher in Europe as stock markets tumbled amid concerns about the health of the U.S. auto sector. [ID:nLU313818] (Reporting by Jennifer Kwan; Editing by James Dalgleish)