CANADA FX DEBT-C$ falls as Fed talk weighs on commodities

Wed Aug 7, 2013 9:55am EDT
 
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By Alastair Sharp
    TORONTO, Aug 7 (Reuters) - The Canadian dollar weakened
versus its U.S. counterpart on Wednesday as signs the U.S.
Federal Reserve could trim its stimulus weighed on commodities
and their related currencies.
    The loonie, as Canada's currency is colloquially known,
pushed as high as C$1.0445 against the greenback in early trade,
the first time it has been above C$1.04 since mid-July, after
two U.S. central bank officials suggested the Fed may reduce the
pace of bond purchases as early as next month. 
    "The markets that have benefited from the largesse of the
Fed over the last few years are probably going to see some
headwinds at least if they start to reel back, with additional
worries about China and slower growth in Asia not helping out,"
said Shaun Osborne, chief currency strategist at TD Securities.
    At 9:39 a.m. (1339 GMT) the Canadian dollar was
trading at C$1.0423 to the greenback, or 95.94 U.S. cents,
compared with C$1.0376, or 96.38 U.S. cents, at Tuesday's North
American close.
    Gold fell to a three-week low, Brent oil slipped below $108,
and copper and other industrial metals fell on a mix of worry
about slowing Chinese growth, an easing of supply worries, and
the Fed signals.   
    Canada's currency is affected by moves in global commodity
markets, given its economy is heavily dependent on exports of
natural resources.
    Prices for Canadian government debt were higher across the
curve, with the two-year bond up 1 Canadian cent to
yield 1.147 percent, and the benchmark 10-year bond 
rising 9 Canadian cents to yield 2.509 percent.