TORONTO (Reuters) - The Canadian dollar touched a one-week low against the U.S. currency on Monday along with global stock prices on investor uncertainty about the global growth outlook and concern about Europe’s debt crisis.
Stocks on major world markets fell for a fourth day on Monday as investors fretted about disappointing economic data in Asia and parts of Europe, while EU finance ministers met again to grapple with the euro zone’s debt crisis. <MKTS/GLOB>
Diplomats said on Monday that Europe will grant Spain an extra year to reach its deficit targets after it outlines further budget savings to a finance ministers meeting in Brussels.
Eurogroup finance ministers were trying to flesh out an agreement by EU leaders at a summit last month on establishing a European banking supervisor and using the bloc’s rescue funds to stabilize bond markets.
But with differences persisting between north European countries and southern states, EU officials said no breakthroughs were likely this week.
“It’s a general risk aversion play,” said John Curran, senior vice president at CanadianForex of the general market mood.
“The euro zone has quite a lot on their plate to discuss, and I think there’s a tendency for market disappointment which could see the Canadian dollar weaken off.”
The Canadian currency ended at C$1.0193 to the U.S. dollar, or 98.11 U.S. cents, after earlier touching a low of C$1.0222, its lowest since June 29. On Friday, the currency finished at C$1.0186 versus the U.S. dollar, or 98.17 U.S. cents.
The key data weighing on the currency was softer-than-expected Chinese inflation data and a record fall in Japan’s machinery goods orders, which help gauge the strength of capital spending.
That followed a disappointingly weak U.S. jobs report on Friday, and added to worries about the global growth outlook.
The currency outperformed against some currencies on Monday including the Japanese yen and New Zealand dollar, but underperformed against others such as the euro.
Camilla Sutton, chief currency strategist at Scotiabank, said she saw the currency trading in a short-term trading range of C$1.0180 to C$1.0260 to the U.S. dollar.
Canadian bond prices edged up across the curve, following the trend in U.S. Treasuries where debt prices rose and benchmark yields fell on bets the U.S. Federal Reserve will embark on large-scale bond buys to stimulate the economy. <US/>
Wall Street economists see a 70 percent chance the Fed will engage in a third round of quantitative easing, nicknamed QE3, according to a Reuters poll conducted shortly after the June payrolls report on Friday.
The two-year government bond edged up 6 Canadian cents to yield 0.955 percent, while the benchmark 10-year bond added 30 Canadian cents to yield 1.658 percent.
Editing by Chizu Nomiyama