Canadian dollar sinks on Greek woes

The Canadian dollar sank by more than a cent Tuesday as downgrades of Greek and Portuguese debt sent investors flocking into the perceived safety of the U.S. currency.

The loonie weakened to 98.27 cents (U.S.) from Monday's close of 99.86 cents after Standard & Poor's cut Greece's sovereign debt ratings to junk status. Portugal ratings were also cut, to single-A-minus.

"This is creating heightened uncertainty over sovereign debt issues," said Rahim Madhavji, president of Knightsbridge Foreign Exchange. "This is creating an environment where investors are considering liquidity and safety before anything else. The risk trade is off, safe haven trade is on."

The U.S. dollar, which typically rises when investors become risk-averse, strengthened against the euro and other major currencies.