CANADA FX DEBT-C$ falls to 2-1/2-month low as earnings bite

Fri Oct 26, 2012 4:34pm EDT
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* C$ ends at C$0.9980 to the U.S. dollar, or $1.0020
    * Softens by 0.5 percent over the week
    * U.S. earnings, Greece worries weigh
    * Traders brush off in-line U.S. GDP reading

    By Claire Sibonney
    TORONTO, Oct 26 (Reuters) - The Canadian dollar hit its
weakest level against the U.S. currency in two and a half months
on Friday as uninspiring corporate earnings weighed on the
market and traders largely brushed off a solid reading of
economic growth in the United States.
    Disappointing results from technology giant Apple Inc
 and a net loss from Internet retailer Inc
 dampened market sentiment, as well as concerns that
Greece may miss its austerity targets.   
    "There was just a general negative mood in markets that
generally supported Treasuries at the expense of equities and
the Canadian dollar," said Sal Guatieri, senior economist at BMO
Capital Markets.
    The Canadian dollar ended the North American
session at C$0.9980 to the greenback, or $1.0020, compared with
C$0.9939, or $1.0061, at Thursday's close. The currency hit an
intraday low of C$0.9994, or $1.0006, it weakest level since
Aug. 7.
    The Canadian dollar ended the week down 0.5 percent, after a
1.4 percent decline the week before. 
    Data on Friday showed U.S. economic growth accelerated in
the third quarter as stepped-up purchases by consumers and a
surprise turnaround in government spending offset the first
cutback in business investment in more than a
    But the numbers were still not considered strong enough to
make a significant reduction in unemployment.
    "A better print (on U.S. GDP) seemed to be expected...but
moreover people are just expecting earnings season to continue
to be poor, and that's going to weigh," said John Curran, senior
vice president at CanadianForex.
    A report showing Spanish unemployment hit a record 25
percent in the third quarter added to gloom about global growth,
which can have a pronounced effect on the commodity-linked
Canadian dollar. 
    Next week, markets will be paying close attention to Bank of
Canada testimony at parliamentary finance and banking
committees, as well as monthly U.S. and Canadian jobs data.
    Adding to uncertainty was the U.S. presidential election on
Nov. 6.
    Highlighting the move into safer assets, prices for Canadian
government debt rose across the curve, following U.S.
    The two-year bond was up 6 Canadian cents to
yield 1.119 percent, while the benchmark 10-year bond
 rose 56 Canadian cents to yield 1.838 percent.