CANADA FX DEBT-C$ weaker as building slumps; U.S. election eyed

Mon Nov 5, 2012 10:54am EST
 
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* C$ at C$0.9969 to US$, or $1.0031
    * Weak Canadian building data weighs on currency
    * Investors seen paring back on riskier assets ahead of vote
    * Pending Greek austerity vote weighs on euro, global tone

    By Alastair Sharp
    TORONTO, Nov 5 (Reuters) - The Canadian dollar weakened on
Monday as data showed construction activity looked set to drop
and investors limited exposure to riskier assets ahead of
Tuesday's U.S. presidential election.
    The currency hit a session low after the value of Canadian
building permits unexpectedly fell sharply in September, data
from Statistics Canada showed. 
    Separately, Canada's federal housing agency said new
homebuilding is expected to moderate further in the final
quarter of 2012. 
    The resource-linked currency had already been trading
weaker, following the cautious tone in a raft of commodities, as
investors pared back bets on riskier assets before Americans go
to the polls on Tuesday in a vote with global ramifications.
 
    At 10:12 a.m. (1512 GMT) the Canadian dollar was
trading at C$0.9969 to the greenback, or $1.0031, compared with
C$0.9956, or $1.0044, at Friday's North American close.
    "The move in the Canadian dollar is consistent with the move
in most of the currencies that trade as risk proxies," said Adam
Cole, global head of foreign exchange strategy at Royal Bank of
Canada. "It may be the uncertainty of the U.S. election as one
factor."
    The presidential vote will be closely watched by financial
markets. The future makeup of the U.S. Congress will also play a
role in how the country deals with the so-called fiscal cliff -
looming spending cuts and tax hikes that could push the world's
largest economy into recession. 
    Gold and oil were steady, while copper hit a two-month low.
   
    RBC's Cole said that worries about a Greek vote on Wednesday
over austerity measures was keeping the euro under pressure and
adding to the more cautious overall tone. 
    The Canadian currency strengthened to its highest level in
almost three weeks against the euro. It also firmed
against the British pound and the Swiss franc
.
    The price of Canadian government debt rose across the curve,
with the two-year bond up 2 Canadian cents to yield
1.059 percent, while the benchmark 10-year bond rose
21 Canadian cents to yield 1.747 percent.