CANADA FX DEBT-C$ drifts lower as markets await Madrid move

Tue Sep 25, 2012 8:23am EDT
 
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* C$ off slightly at C$0.9800 vs US$, or $1.0204
    * Bond prices rise across the curve

    By Claire Sibonney
    TORONTO, Sept 25 (Reuters) - The Canadian dollar eased
slightly against the U.S. dollar on Tuesday as uncertainty over
Spain's next move to tackle its funding problems and renewed
worries about global growth capped moves in riskier assets.
    Investors have turned cautious after a strong rally in
global markets which followed new policies unveiled earlier this
month by the world's major central banks to stimulate growth and
support efforts by Europe to resolve its debt crisis.
    "I suspect that there is a need for a new trigger and a new
catalyst to the upside on the euro and for risk assets, and the
answer could be from Europe with the market really hoping that
we get at some point soon Spain making the formal request for a
bailout," said Audrey Childe-Freeman, head of foreign exchange
strategy.
    "Until we get that I think we'll stay in a very kind of ...
cautious mood in the market. And from a Canadian dollar
perspective it means that we probably remain within the recent
ranges."
    This week, Spain is expected to unveil new structural
reforms and its draft budget plan for 2013. Investors also await
results of stress tests on its banking sector.
    At 8:09 a.m. (1209 GMT), the Canadian dollar stood
at C$0.9800 versus the greenback, or $1.0204, slightly weaker
than Monday's North American session finish at C$0.9788, or
$1.0217.
    Canadian retail sales data and U.S. consumer confidence
figures later in the day are also expected to provide direction.
    Childe-Freeman said traders were still looking for a
sustained move through Canadian-dollar support at C$0.9800,
while resistance was seen around C$0.9730. 
    Canadian government bond prices climbed across the curve,
with the two-year bond up 2 Canadian cents to yield
1.106 percent, and the benchmark 10-year bond up 11
Canadian cents, yielding 1.804 percent.