CANADA FX DEBT-C$ weakens on fears of Greek euro exit

Mon May 14, 2012 4:39pm EDT
 
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* C$ ends at C$1.0029 vs US$, or 99.71 U.S. cents
    * C$ outperforms on crosses vs commodity peers
    * Hits 7-month high against Aussie dollar
    * Strongest against euro since January, 2011
    * Bond prices edge higher across curve


    By Andrea Hopkins	
    TORONTO, May 14 (Reuters) - Canada's dollar fell against its
U.S. counterpart on Monday as investors eschewed riskier assets
due to mounting political uncertainty in Greece and worries
about slowing Chinese growth.	
    Global stocks slid to their lowest point in months on
concern Greece could leave the euro zone, while oil prices fell
after a move by economic powerhouse China to prop up lending
sparked fears its economy was weaker than has been thought.
 	
    Investors took refuge in government debt and the safe-haven
U.S. dollar. The euro hit a near four-month low against the
dollar. 	
    While the Canadian dollar slid further below parity with its
U.S. counterpart, it gained against many other major currencies,
buoyed by memories of Friday's strong Canadian employment report
and the prospect of eventual rate hikes.	
    "You look at how the currency has performed relative to most
of the crosses, and it is actually not bad," said David Tulk,
chief Canada macro strategist at TD Securities.	
    "It's still a risk-off day and that lifts the U.S. dollar,
so it is not too surprising to see the Canadian dollar generally
weaker. But Canada relative to the Australia dollar, or relative
to the euro, is outperforming. We're doing better than most
others against the U.S.," Tulk noted.	
    The Canadian dollar ended the North American
session at C$1.0029 versus the U.S. dollar, or 99.71 U.S. cents,
down slightly from Friday's close at C$1.0009 versus the U.S.
dollar, or 99.91 U.S. cents.	
    But it hit its strongest level against the Australian dollar
 since October and was at its firmest against the euro
since January of 2011. 	
    The Canadian dollar was also holding in relatively well
compared to global stock markets, noted Carlos Leitao, chief
economist at Laurentian Bank Securities.	
    "The loonie hasn't lost as much as the equity markets would
have suggested. There is some underlying strength to the
Canadian dollar despite this large-scale aversion to risk,"
Leitao said.	
    The currency was supported by data on Friday that showed
Canada added 58,200 jobs in April, mostly full-time, after a
whopping gain of 82,300 new positions in March, increasing bets
that the Bank of Canada might start to tighten policy sooner
than previously thought. 	
    Higher interest rates tend to support currencies by
attracting global capital flows.	
    With stock markets tumbling on Monday, Canadian bond prices
climbed across the curve. The two-year government bond
 rose 3.5 Canadian cents to yield 1.284 percent, while
Canada's 10-year bond jumped 21 Canadian cents to
yield 1.948 percent.