CANADA FX DEBT-C$ falls near parity after Europe elections

Mon May 7, 2012 8:24am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ hits 3-wk low of C$0.9988 vs US$, or $1.0012
    * Bond prices climb across the curve

    By Claire Sibonney	
    TORONTO, May 7 (Reuters) - The Canadian dollar stumbled to
the lowest level against its U.S. counterpart in almost three
weeks on Monday on worries that anti-austerity election results
in Europe could thwart the region's drive to contain its debt
crisis.	
    Investors fled riskier assets after the two pro-bailout
parties in Greece failed to win a parliamentary majority,
rekindling fears over the country's future in the euro zone.
 	
    Greece's vote, combined with the victory of Socialist
Francois Hollande over incumbent Nicolas Sarkozy in a French
presidential election, will raise pressure on Europe's
paymaster, Germany, to pursue a more growth-oriented approach to
the crisis.	
    "In France it seemed to be largely expected ... people were
maybe a little more surprised at the more tenuous coalition that
could exist in Greece," said David Tulk, chief Canada macro
strategist at TD Securities.	
    "This is consistent with a theme that as good as we think
that things are in Europe, we still are nowhere near out of the
woods, so prepare for more volatility in the interim."	
    At 8 a.m. (1200 GMT), the Canadian dollar was at C$0.9967
versus the U.S. dollar, or $1.0033, down from Friday's finish at
C$0.9955 versus the U.S. dollar, or $1.0045. Earlier, the
domestic currency touched a low of C$0.9988, or $1.0012, its
weakest level against the greenback since April 17.	
    Tulk noted that the parity level still stood out as
significant support for the U.S. dollar against Canada's.	
    "(The Canadian dollar) has held in reasonably well, even the
euro has been still within its recent range," he said.	
    "That probably reflects the fact that some of these results,
at least from the core perspective were somewhat expected," he
said."	
    The signs of a renewed political crisis in Europe came just
as Friday's downbeat U.S. nonfarm payrolls report dealt a blow
to hopes of recovery for the world's largest economy.	
    Canadian bond prices tracked U.S. Treasuries higher across
the curve. 	
    Canada's 2-year bond up 4 Canadian cents to yield
1.232 percent, while the benchmark 10-year bond 
climbed 35 Canadian cents to yield 1.982 percent.