CANADA FX DEBT-C$ hits 1-week low on growth, Greece fears

Tue Mar 6, 2012 4:39pm EST
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* C$ ends at C$1.0006 vs US$, or 99.94 U.S. cents
    * Bond prices track Treasuries higher

    By Claire Sibonney	
    TORONTO, March 6 (Reuters) - Canada's dollar fell for
a third straight session against the greenback on Tuesday,
dropping to the lowest level in more than a week as fears grew
that the global growth outlook is darkening and that Greece may
not meet a looming debt-restructuring deadline. 	
    China's lowering of its economic growth target for this year
and data pointing to the possibility of Europe slipping back
into recession have slowly eroded the market optimism generated
by the European Central Bank's huge injection of loans to banks
since December.	
    "There are two things that have driven the rally that we've
seen in asset classes, including (the Canadian dollar), and
that's been central bank policy, with the G4 extraordinarily
loose and loosening, and the global growth outlook," said
Camilla Sutton, chief currency strategist at Scotia Capital.	
    "I think if we really do have a shift in either of those,
that will precede a period of CAD weakness ... but we are still
not at a point where we can officially call a turn, I suspect
we're more in a period of retracement."	
    Meanwhile, fears were rekindled that Greece and its bond
holders may not meet Thursday's deadline for Athens to receive
critically important bailout funds so that it can meet bond
repayments due by March 20.	
    The main bond-holders group said a disorderly default would
cause more than a trillion euros of damage to the euro zone and
could leave Italy and Spain dependent on outside help to stop
the contagion that might result. 	
    The Canadian dollar ended the North American
session at C$1.0006 against the U.S. dollar, or 99.94 U.S.
cents, down from Monday's North American session close of
C$0.9942 versus the U.S. dollar, or $1.0058. Earlier, it
weakened to C$1.0029, or 99.71 U.S. cents, its softest level
since Feb. 27.	
    Sutton put near-term resistance for the U.S. dollar against
Canada's around the psychologically important level of C$1.01,
and support at Tuesday's open around C$0.9947.	
    Canadian bond prices tracked U.S. Treasuries higher due to
the risk-off tone in markets. 	
    Canada's two-year bond was up 8 Canadian cents to
yield 1.080 percent. The 10-year bond climbed 38
Canadian cents to yield 1.936 percent.