CANADA FX DEBT-C$ hits one-week low after Bank of Canada speech

Tue Oct 16, 2012 8:23am EDT
 
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* C$ at C$0.9862 to US$, or $1.0139
    * Hits weakest level since Oct 4
    * Bank of Canada omits hawkish language, weighs on C$
    * Signs of positive equities lending support

    By Alastair Sharp
    TORONTO, Oct 16 (Reuters) - The Canadian dollar hit its
weakest level in more than a week against its U.S. counterpart
on Tuesday as traders digested a Bank of Canada speech that
failed to mention a long-stated intention to raise interest
rates once conditions permit.
    At 8:10 a.m. (1210 GMT) the Canadian dollar was at
C$0.9862 to the greenback, or $1.0139, compared to C$0.9800, or
$1.0204, at Monday's North American session close.
    "Clearly the market is still reacting to the comments from
(Bank of Canada Governor) Carney yesterday, that's continuing to
weigh on the Canadian dollar," said Jeremy Stretch, head of
foreign exchange strategy at CIBC World Markets in London.
    The central bank chief said the Bank would take whatever
action necessary to keep inflation on target and acknowledged
the effect global uncertainty was having on Canada's
resource-linked economy. 
    Gold and copper lifted off one-month lows, while oil eased.
   
    The Canadian dollar was at its weakest since Oct 4, though
the slippage was capped by signs that North American equities
could open higher on the back of corporate earnings. 
    The government bond market was mixed, with short end prices
eking out gains and longer-dated debt slipping. 
    The two-year bond gained 1 Canadian cent to yield
1.077 percent, while the benchmark 10-year bond fell
21 Canadian cents to yield 1.820 percent.