Tuesday November 11, 2008 - 23:16:47 GMT
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Reuters - www.reuters.com
Forex Market News - CANADA FX DEBT-C$ rattled by steep slide in oil prices
* C$ unable to hold on to early-session gains
* Gloomy market sentiment weighs on currency
* Bond market closed for Remembrance Day
By Frank Pingue
TORONTO, Nov 11 (Reuters) - The Canadian dollar closed
lower versus the U.S. dollar on Tuesday as a sharp slide in the
price of oil, a key Canadian export, and fears of a global
recession shook the currency off its early gains.
Bond markets, which finished flat to lower on Monday, were
closed in Canada for Remembrance Day and in the United States
for Veterans Day.
At 4 p.m. (2100 GMT), the Canadian unit was at C$1.2050 to
the U.S. dollar, or 82.99 U.S. cents, down 0.7 percent from
C$1.1965 to the U.S. dollar, or 83.58 U.S. cents, at Monday's
While fundamentals all pointed to a lower Canadian dollar,
the currency's slide was believed to have been exaggerated in
thin trading with many market players sitting the session out
because of holidays in Canada and the United States.
The Canadian currency bounced around in a range of C$1.2098
to the U.S. dollar, or 82.66 U.S. cents, to C$1.1892 to the
U.S. dollar, or 84.09 U.S. cents, before closing at its lowest
level in more than a week.
Concerns that the deepening global economic crisis will
slow demand for oil dragged prices for the commodity 5 percent
lower, which is a drag on the currency since Canada is a key
exporter of oil.
Worries about the state of the global economy generally
prompted a move into the greenback, which is widely considered
a more secure currency to hold during times of uncertainty.
"Our sense is the economic situation seems to be getting
worse rather than better, and if that's the case then investors
will seek out safety and so they are going to load up on
greenbacks for awhile," said Sal Guatieri, senior economist at
BMO Capital Markets.
"But my understanding is markets are really thin today so
that's probably exaggerating moves in the currency markets."
Also, the excitement about a Chinese economic stimulus plan
that offered support to the Canadian dollar in the previous
session, since it would likely mean more demand for Canada's
commodities, was short-lived.
When a beefed-up slate of traders return on Wednesday the
Canadian currency could be in store for another slide since
North American stock markets all finished lower.
(Editing by Peter Galloway)
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