CANADA FX DEBT-C$ softens on China slowdown fears

Tue Mar 20, 2012 8:29am EDT
 
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* C$ at C$0.9916 vs US dollar, or $1.0085
    * BHP Billiton sparks China slowdown fears
    * Bond prices mostly higher

    By Jon Cook	
    TORONTO, March 20 (Reuters) - The Canadian dollar pulled
back from a two-week high against its U.S. counterpart on
Tuesday as concerns a slowdown in China could hit global growth
boosted the greenback's safe-haven appeal.	
    Commodity-linked currencies such as the Australian and
Canadian dollars weakened after BHP Billiton, the
world's biggest miner, raised concerns about the possibility of
a sharp slowdown in demand from China, a top metals consumer.
 	
    Earlier this month China cut its 2012 growth target to an
eight-year low of 7.5 percent. 	
    That led to the Canadian dollar pulling back from its
overnight session high of C$0.9869 versus the U.S. dollar, close
to its March low at C$0.9842.	
    "That may have sparked a little bit of risk aversion here,
and we've just bounced back to where we were 24 hours ago," said
Matt Perrier, a director of foreign exchange sales at BMO
Capital Markets.	
    At 7:55 a.m. (1155 GMT), the Canadian dollar stood
at C$0.9916 versus the U.S. dollar, or $1.0085, down from
Monday's North American session close at C$0.9875 versus the
greenback, or $1.0127.	
    Perrier said the Canadian currency would likely stay within
a narrow window between parity with the U.S. dollar on the top
end and at C$0.9850 on the bottom.	
    In absence of any Canadian data, North American investors
were focused on U.S. February housing starts data due at 8:30
a.m. (1230 GMT) and remarks later in the day by Treasury
Secretary Timothy Geithner, on the international financial
system, and by Federal Reserve Chairman Ben Bernanke.	
    Recently, the U.S. dollar has been boosted by a steady
stream of encouraging U.S. economic data, reducing the
likelihood of further stimulus from the Federal Reserve. 
 	
    "The news has been good on the North American economic
front, but until you start to see the market price in some
interest rate moves we're not going to get a huge, knee-jerk
reaction," said Perrier.	
    Canadian bond prices were mostly higher, with the two-year
bond up 4 Canadian cents to yield 1.275 percent. The
10-year bond rose 38 Canadian cents to yield 2.245
percent.