CANADA FX DEBT-C$ weakens on global growth fears

Tue Apr 10, 2012 9:38am EDT
 
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* C$ at C$0.9992 vs US$, or $1.0008
    * China import data weighs on commodities
    * U.S. data hurts euro zone debt sales
    * Bond prices mostly higher

    By Jon Cook	
    TORONTO, April 10 (Reuters) - The Canadian dollar edged down
against its U.S. counterpart on Tuesday as soft Chinese import
data weighed on commodities and last week's soft U.S. jobs
numbers hurt bond sales in Italy and Spain as investors worried
about the impact on euro zone growth.	
    Data showed Chinese imports undershot expectations, growing
5.3 percent on the year in March - consistent with other data
suggesting soggy domestic demand in the first quarter of the
year. 	
    Meanwhile, Spanish and Italian yields spreads over German
Bunds widened, weighing on the single currency, as the U.S. jobs
numbers increased concerns about the impact a weaker U.S.
economy may have on euro zone growth, especially in the region's
weaker economies. 	
    Spanish bonds have also come under particularly heavy
pressure recently as investors fretted Spain could be the next
source of contagion in the euro zone.    	
    "It's more external factors that are driving the price
action in the Canadian dollar," said David Bradley, a director
of foreign exchange trading at Scotia Capital.	
    At 9:10 a.m. (1310 GMT), the Canadian dollar was at
C$0.9992 versus the U.S. dollar, or $1.0008, down from Monday's
North American close at C$0.9965 versus the U.S. currency, or
$1.0035.	
    The Canadian dollar had strengthened overnight after Chinese
trade data showed strong rise in exports. But that was
short-lived as investors shifted their focus to unexpectedly
soft import growth and fears about Europe's debt crisis.	
    In commodity markets, front-month Brent crude futures fell
to $121.56 a barrel and U.S. oil dropped to $101.80. 	
    Copper prices also fell due to the Chinese data as investors
are watching for signs that China can avoid a hard
landing. 	
    However, gold prices were on the rise as hopes grew that the
 sluggish employment market in the United States could spark a
fresh round of U.S. quantitative easing. 	
    Bradley said the Canadian dollar would likely remain trapped
in a tight range between C$0.9950 and parity with the U.S.
dollar.	
    Canadian government bond prices were mostly higher with
Canada's 2-year bond up 2 Canadian cents to yield
1.225 percent, while the 10-year bond gained 33
Canadian cents to yield 2.032 percent.