CANADA FX DEBT-C$ weakens vs US$ on hopes of U.S. debt resolution

Tue Oct 15, 2013 10:23am EDT
 
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* C$ at C$1.0366 vs US$, or 96.47 U.S. cents
    * C$ weakens to multi-month lows against Aussie and New
Zealand dollars
    * Bond prices mostly lower across curve

    By Solarina Ho
    TORONTO, Oct 15 (Reuters) - The Canadian dollar was weaker
on Tuesday against its U.S. counterpart, which rose to a
one-month high against a basket of currencies on hopes that
Washington lawmakers are close to finalizing an agreement that
would end a government shutdown and avert a default on U.S.
debt.
    Expectations were heightened after Senate Majority Leader
Harry Reid, a Democrat, and his Republican counterpart, Mitch
McConnell, wrapped up lengthy deal talks on Monday and expressed
optimism. 
    The Treasury Department estimates that the government will
reach a $16.7 trillion borrowing limit on Thursday, Oct 17. 
    "Optimism that's coming out through Washington at least for
an increased prospects for a deal seems to be providing a bid to
the U.S. dollar," said Mazen Issa, macro strategist At TD
Securities. 
    "Just looking at across the major currency baskets as well,
(the U.S. dollar) is generally stronger against the G10."
    The Canadian dollar was at C$1.0366 versus the
greenback, or 96.47 U.S. cents at 9:58 a.m. (1501 GMT), softer
than Monday's Thanksgiving holiday close at C$1.0349, or 96.63
U.S. cents.
    The Canadian dollar's performance was mixed against other
key currencies, but weakened to multi-month lows against its
commodities sister currencies. It hit its weakest level against
the Australian dollar since early June and its weakest
level against the New Zealand dollar since late
April.
    Domestically, data from the Canadian Real Estate Association
showed sales of existing homes in Canada edged up in September
and surged from a year earlier. 
    Figures from the Teranet-National Bank Composite House Price
Index showed Canadian home prices were unchanged in September
after hitting a record high the month before, suggesting the
housing market is cooling. 
    Government bond prices were mostly lower across the maturity
curve, with the two year bond off 3 Canadian cents to
yield of 1.226 percent and the benchmark 10-year bond
 falling 26 Canadian cents to yield 2.625 percent.