TORONTO - The Canadian dollar was sharply lower Friday morning as worries continued to grow over European debt, a pullback in commodities and tensions in Korea.
The loonie was down 1.04 cents at 98 cents US as other major currencies also moved lower against the greenback, traditionally seen as a safe haven currency in times of trouble.
Reports suggest Portugal's partners in the European Union were urging the country to seek aid to prevent a sustained attack from bond market speculators.
Meanwhile, other reports say that an international bailout loan for Ireland could include an effort to make Ireland's senior bondholders -- chiefly foreign banks -- eat losses from the country's debt-crippled banks.
John Curran, senior vice-president, CanadianForex, says "risk aversion is rampant" as a result of the tense military situation in Asia after North Korea upped its rhetoric with its state-run news agency saying planned naval exercises by South Korea and the United States "moved the peninsula closer to the brink of war."
"Irish debt concerns are peaking and fear of contagion to other indebted countries is bubbling over," Curran added in a note.
"The Euro and commodity currencies are taking the brunt of the punishment as investors scale back risk profiles."
Curran said recent gains by the Canadian dollar on speculation of future rate hikes were "swept away instantly by the negative impact of Korean and European events."
Oil was down 43 cents at US$83.43 a barrel on the New York Mercantile Exchange, while copper was off three cents at US$3.72 a pound.
December gold contract backed off $18.30 to US$1354.70 an ounce.
