CANADA FX DEBT-C$ weakens on global growth fears

Thu Mar 29, 2012 9:53am EDT
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* C$ at C$1.009 vs US$, or 99.91 U.S. cents
    * U.S. jobless claims drop
    * Euro-zone debt fears resurface
    * Bond prices higher across the curve

    By Jon Cook	
    TORONTO, March 29 (Reuters) - The Canadian dollar slid for
the third straight session against the U.S. currency on Thursday
as worries about the global economy continued to hurt commodity
    Oil, gold and industrial metals such as copper have tumbled
this week after U.S. Federal Reserve Chairman Ben Bernanke
stoked doubt about the strength of the U.S. economic recovery,
saying conditions remain fragile.   	
    Mixed U.S. data on Thursday didn't help clarify the picture
for investors. Weekly claims for jobless benefits fell to a
four-year low, but were still more than expected in a Reuters
survey. Also, data showed the U.S. economy expanded as expected
in the fourth quarter, which came on the heels of Wednesday's
soft durable goods numbers.  	
    Cracks in the U.S. recovery are showing at a time when
investors are worried about a possible slowdown in China, after
the world's top consumer recently lowered its growth outlook for
this year to below 8 percent. 	
    "The catalyst is mainly concern about the state of the
global economy," said Charles St-Arnaud, Canadian economist and
currency strategist at Nomura Securities International in New
York. "You see risky assets across the globe selling off and
that's putting pressure on the Canadian dollar."	
    At 9:25 a.m. (1325 GMT), the Canadian dollar was at
C$1.009 versus the U.S. currency, or 99.91 U.S. cents, down from
Wednesday's close at C$0.9979 versus the U.S. dollar, or
    In Europe, concerns about contagion from the euro-zone debt
crisis resurfaced as Italian and Spanish bond yields rose and
investors braced for a tough budget from Spain on Friday that
could make it harder for the country to return to growth.
    Statistics Canada data on Thursday showed producer prices
climbed by 0.2 percent in February from January, but the
increase was less than the 0.4 percent forecast by analysts.
    Traders were looking ahead to the release of the Canadian
government's 2012-13 fiscal budget after markets close on
Thursday. It was not expected to have a large impact on the
Canadian dollar.	
    "The more front-loaded the cost cuts are, the more negative
an impact it will have on the Canadian economy," said St-Arnaud.	
    He said the Canadian dollar should hover between parity with
the U.S. dollar and a high of C$0.9850 versus the greenback, or
    The waning risk appetite was reflected in higher Canadian
bond prices. Canada's two-year bond rose 5 Canadian
cents to yield 1.170 percent, while the 10-year bond 
added 23 Canadian cents to yield 2.092 percent.