CANADA FX DEBT-C$ hits fresh 11-year lows as investor anxiety lingers
(Updates with strategist comment, closing figures, additional details) * Canadian dollar ends at C$1.3418, or 74.53 U.S. cents * Bond prices mixed across maturity curve By Solarina Ho TORONTO, Sept 29 (Reuters) - The Canadian dollar extended its retreat to fresh 11-year lows against the U.S. dollar on Tuesday, as overall investor sentiment remained somewhat grim and a host of variables conspired to keep the currency on the defensive. Global stocks slid to their lowest in more than two years, while commodity prices and emerging markets like China, a major commodities consumer, remained under pressure. "We've had more recently, quite a bit more focus on market volatility, China, weaker equity markets and those things are tending to correlate more strongly with the Canadian dollar," said Shaun Osborne, chief currency strategist at Scotiabank. "The poor old Canadian dollar can't seem to hold a bid at the moment." The Canadian dollar, which was weaker against all of its key counterparts, ended the session at C$1.3418 to the greenback, or 74.53 U.S. cents, weaker than the Bank of Canada's official close of C$1.3394, or 74.66 U.S. cents. During the session, the currency traded between $1.3373 and C$1.3457, which was the softest it has been since June, 2004. "We're probably going to see some even weaker levels in the not too distant future. It appears to us we're on the cusp of potentially another big sell off," said Osborne. A higher price in crude, a major Canadian export and driver for the loonie, helped temper some of the currency's declines. In Canada, producer prices for August fell slightly more than expected following three straight months of gains due to the lower cost of energy and petroleum products. Canada's gross domestic product for July is due at 8:30 a.m. EDT on Wednesday. Economists polled by Reuters are expecting a 0.2 percent rise. Canadian government bond prices were mixed across the maturity curve, with the two-year down 0.5 Canadian cent to yield 0.508 percent and the benchmark 10-year rising 9 Canadian cents to yield 1.435 percent. The Canada-U.S. two-year bond spread narrowed to -14.5 basis points, while the 10-year spread narrowed to -62.6 basis points. (Reporting by Solarina Ho; Editing by Nick Zieminski and Chris Reese)
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