CANADA FX DEBT-Canadian dollar slips as Europe disappoints

Mon Sep 24, 2012 8:46am EDT
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* C$ weaker at C$0.9764, or $1.0242
    * Bond prices climb across the curve

    By Claire Sibonney
    TORONTO, Sept 24 (Reuters) - The Canadian dollar lost ground
against the safe-haven U.S. dollar on Monday, following a broad
retreat in riskier assets as markets shifted focus from central
bank stimulus schemes to weak economic fundamentals and the euro
zone's still unresolved debt crisis.
    Data showed German business sentiment dropped for a fifth
straight month in September to its lowest since early 2010,
raising fears of recession and underlining that a bold
bond-buying plan laid out by the European Central Bank is no
economic elixir. 
    Spain's troubles were also at the top of investors' minds,
with the government making slow progress towards asking for the
international bailout that markets are anticipating.
    With initial enthusiasm fading over planned economic support
measures in the United States, Europe and Japan to boost asset
markets, the Canadian dollar took its cue from falling equity
and commodity prices. 
    "It's suffering along with all of the other general risk
proxies," said Adam Cole, global head of FX strategy at RBC
Capital Markets in London.
    Canada's currency was outperforming against other majors
however, including its commodity-linked counterparts, the
Australian and New Zealand dollars.
    "It's just the usual story that when the U.S. dollar is bid
and everything else is selling off, Canada tends to get dragged
up on the crosses because of its close link to the U.S.," added
    At 8:23 a.m. (1223 GMT), the Canadian dollar stood
at C$0.9810 against the U.S. dollar, or $1.0194, softer than
Friday's North American session close at C$0.9764, or $1.0242.
    With little domestic data out on Monday, markets were
looking ahead to retail sales and monthly GDP later in the week.
    Cole said the C$0.9840 level would provide some near-term
support for the Canadian dollar. A few weeks ago, the same level
acted as resistance before the currency's aggressive move
    Canadian government bond prices advanced across the curve,
with the two-year bond up 4 Canadian cents to yield
1.116 percent, and the benchmark 10-year bond up 30
Canadian cents, yielding 1.818 percent.