CANADA FX DEBT-C$ hits 1-week low on risk sell-off

Wed Aug 22, 2012 8:27am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ eases to C$0.9927 vs US$ or $1.0074
    * Bond prices pick up across the curve
    * Bank of Canada, retail sales in focus

    By Claire Sibonney
    TORONTO, Aug 22 (Reuters) - The Canadian dollar eased to a
one-week low against its U.S. counterpart on Wednesday,
retreating further from 3-1/2 month highs hit in the previous
session as doubts about Europe's progress on its debt crisis and
weak export data from Japan underscored the headwinds facing the
global economy.
    Japan's exports slumped the most in six months in July as
shipments to Europe and China tumbled, adding to concerns over
global demand after a string of dire trade figures from Asia's
export engines. 
    A warning from U.S. computer Dell after the market close on
Tuesday also weighed on Wall Street, which provided direction
for other risky assets. 
    "Risky assets generally are under a little bit of pressure
today. I think the lead is really coming from the U.S. equity
futures," said Adam Cole, global head of foreign exchange
strategy at RBC Capital Markets in London.
    Wednesday's Canadian retail sales data, comments from Bank
of Canada's Mark Carney who is speaking to the Canadian Auto
Workers union and the U.S. Federal Reserve's policy-meeting
minutes will be in focus for the rest of the day.
    "Potentially, Carney has the ability to move the market
quite significantly if he's as hawkish as he was taken to be a
couple of weeks ago on reiterating the tightening bias which
obviously no other central bank has," added Cole.
    Any more confirmation that Carney is comfortable with a
relatively strong exchange rate would also be expected to lift
the Canadian dollar.
    At 8:08 a.m. (1208 GMT), the Canadian dollar was at
C$0.9920 versus the U.S. dollar, or $1.0081, weaker than
Tuesday's North American session close at C$0.9897, or $1.0104.
Earlier, it drifted as low as C$0.9927, or $1.0074, its softest
level since Aug. 15.
    Cole estimated the day's range for the Canadian dollar to
hold between Tuesday's strongest point around C$0.9840 versus
the greenback and parity on the downside.
    Against the euro, the Canadian dollar hit its
weakest level in two weeks.
    Still, investors questioned whether signs of progress in
Europe warranted the recent market rally. The next few days will
kick off a string of meetings that could go a long way in
shaping the future course of the euro zone debt crisis.
    Greek Prime Minister Antonis Samaras meets with the head of
the Eurogroup of euro zone finance ministers, Jean-Claude
Juncker, in Athens before travelling later in the week to see
German Chancellor Angela Merkel and French President François
Hollande. 
    Canadian bond prices picked up across the curve, with the
two-year bond adding 3 Canadian cents to yield 1.168
percent, and the benchmark 10-year bond gaining 19
Canadian cents to yield 1.910 percent.