CANADA FX DEBT-C$ rattled lower by euro zone concerns

Mon Apr 23, 2012 8:31am EDT
 
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* C$ at C$0.9973 vs US$, or $1.0027
    * Euro zone PMI, politics hit global markets
    * Bonds climb across curve

    By Jennifer Kwan	
    TORONTO, April 23 (Reuters) - Canada's dollar weakened
against its U.S. counterpart on Monday, weighed down by soft
commodity prices as European economic and political uncertainty
hit investor confidence about global growth.	
    Global currency and stocks markets were rattled by data that
showed the euro zone's business slump deepened at a far faster
pace than expected in April, suggesting the economy will stay in
recession at least until the second half of the year. 
 	
   Investors were also digesting the victory in the first round
of France's presidential poll of the Socialist Francois
Hollande, who has promised to renegotiate a European budget
pact. 	
    Also the Dutch government, a close ally of Germany in
calling for tougher austerity measures to fight the crisis, was
preparing to resign because of a crisis over budget cuts.
 	
    "Risk flare-ups seem to be coming up again with weak PMI
numbers across the euro zone overnight, some concerns over the
upcoming French elections and the failure of the Dutch budget
talks, potentially prompting an early election there," said Matt
Perrier, a director of foreign exchange sales at BMO Capital
Markets.	
    "That's all weighing on risk sentiment to start off the
week."	
    At around 8:10 a.m. (1210 GMT), the Canadian dollar 
was at C$0.9973 against the greenback, or $1.0027, down from
Friday's finish at C$0.9926 against the greenback, or $1.0075.	
    The developments overshadowed last week's Group of 20 vow in
which leading world economies pledged $430 billion in new
funding for the International Monetary Fund, more than doubling
its lending power in a bid to protect the global economy from
the euro-zone debt crisis. 	
    With little market-moving North American data to speak of,
traders and strategists will look to moves overseas for
direction.	
    "We'll continue to monitor events in Europe -- watch equity
performances, watch peripheral bond spreads. We'll take our cue
off that," said Perrier. He sees the Canadian dollar trading in
a range of about C$0.9940 to C$1.0045 versus the U.S. currency
in the near term. 	
    Canadian government bond prices were mostly higher with the
two-year bond up 4 Canadian cents to yield 1.332
percent. The benchmark 10-year bond climbed 30
Canadian cents to yield 2.028 percent.