CANADA FX DEBT-C$ weakens to six-week low on growth fears

Tue Apr 10, 2012 5:07pm EDT
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* C$ at C$1.0041 vs US$, or 99.59 U.S. cents
    * C$ hits lowest level since Feb. 27
    * China import data adds to global growth fears
    * IMF forecasts lower commodity prices for 2012-13
    * Bond prices mostly higher

    By Jon Cook	
    TORONTO, April 10 (Reuters) - The Canadian dollar hit its
lowest level in more than a month against its U.S. counterpart
on Tuesday after soft Chinese data and a downbeat report by the
International Monetary Fund raised fears of tepid global growth
that hurt commodity-linked currencies.	
    Data on Tuesday 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. 	
    The weaker Chinese numbers came on the heels of Friday's
disappointing U.S. jobs data and heightened fears the world's
top two economies may be cooling more than expected.	
    The swoon in Canada's growth-reliant currency mirrored the
dive in global stocks on Tuesday as oil and other key
commodities sank. 	
    "A lot of different asset classes are at their one-month
lows or highs depending which ones," said Camilla Sutton, chief
currency strategist for Scotia Capital.	
    Canadian and U.S. stocks dropped for a fifth straight day.
    The Canadian dollar finished at C$1.0041 versus the
U.S. dollar, or 99.59 U.S. cents, down from Monday's North
American close at C$0.9965 versus the U.S. currency, or $1.0035.	
    The currency at one point hit C$1.0046, its weakest since
touching C$1.0050 on Feb. 27.	
    Had the Canadian currency weakened beyond the C$1.0050 mark
it might have signaled it was ready to break out of its recent
narrow range, said Sutton.	
    "We've been in a range for 10 weeks now and there's been a
bit of complacency in terms of where we're moving to," she
added. "The threat of breaking a range suddenly jumps into
everyone's radar."	
    Concerns about European debt have resurfaced and could be a
catalyst for further declines if the yields on riskier Italian
and Spanish debt climb further.	
    "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.	
    Risk sentiment also suffered after an IMF report said
commodity-exporting countries should prepare for lower prices
given weaker global economic activity and lower demand.
    Brent crude fell $2.79 to settle at $119.88 a barrel, the
weakest close since Feb. 17. Copper prices also fell due
to the Chinese data as investors are watching for signs that
China can avoid a hard landing. 	
    Canadian government bond prices were mostly higher with
Canada's 2-year bond up 10 Canadian cents to yield
1.188 percent, while the 10-year bond gained 66
Canadian cents to yield 1.995 percent.