CANADA FX DEBT-C$ at more than 4-mth low, breaks through C$1.10

Tue Sep 9, 2014 9:38am EDT
 
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* Canadian dollar at C$1.1015 or 90.79 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Sept 9 (Reuters) - The Canadian dollar weakened to
a more than four-month low against the greenback on Tuesday,
breaking through the psychologically key C$1.10 level as broad
demand for the U.S. dollar saw the loonie extend the previous
session's selloff.
    A reassessment of the future path of monetary policy in the
United States gave the greenback its strength the day after
research released by the San Francisco Fed showed investors
expect the Federal Reserve to keep interest rates lower for
longer, and to raise them more slowly, than policymakers expect.
 
    Weaker-than-anticipated housing starts figures for August
also weighed on the Canadian dollar, though analysts say there
is not much in the way of top-tier domestic economic data this
week to drive the loonie. 
    But the currency's losses accelerated after it pierced the
C$1.10 level, which had posed technical resistance for the
currency pairing on different occasions in July and August.
    "We're at a pretty strong inflection point right now. This
C$1.10 level is big from a psychological perspective and we've
been stopped out here before," said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary. 
    "If we break out here, things could escalate quickly." 
    The Canadian dollar was at C$1.1015 to the
greenback, or 90.79 U.S. cents, weaker than Monday's close of
C$1.0973, or 91.13 U.S. cents. The loonie hit a session low of
C$1.1024, its lowest level since late April.
    From here, there is the potential for momentum to take the
U.S. dollar-Canadian dollar pairing up to C$1.11, or markets
could see some consolidation that could take it back to the low
C$1.09s, said Smith.
    Still, as investors have shown their willingness to buy the
currency pairing on any dips, "I don't think we'll see much
loonie strength past the C$1.09 figure," he said.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3-1/2 Canadian
cents to yield 1.142 percent and the benchmark 10-year
 down 20 Canadian cents to yield 2.164 percent.

 (Editing by Chizu Nomiyama)