CANADA FX DEBT-C$ slips but off overnight low, bonds up

Tue Nov 3, 2009 9:01am EST
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 * C$ dips to 92.60 U.S. cents, but up from overnight low
 * Bond prices edge up across curve as stocks fall
 * Employment data, Fed in focus this week
 By Ka Yan Ng
 TORONTO, Nov 3 (Reuters) - Canada's currency was slightly
weaker but off overnight lows against the U.S. currency on
Tuesday, hurt by less risk appetite arising from concerns about
the European banking sector.
 The Canadian dollar was among several in a basket of
currencies to be hit by risk aversion, which put the U.S.
dollar on a course higher.
 The EU Commission quoted results of stress tests in the
banking sector, published in early October, which said losses
could amount to 400 billion euros in 2009-10. [ID:nL3566693]
 Poor results from UBS UBSN.VS and a shake-up of UK banks
Lloyds (LLOY.L: Quote) and Royal Bank of Scotland (RBS.L: Quote) also
prompted investors to cut back on risk. [MKTS/GLOB]
 "The news is not bullish on equities, and by extension, not
bullish on currencies like Canada," said Jack Spitz, managing
director of foreign exchange at National Bank Financial.
 At 8:35 a.m., the Canadian dollar was at C$1.0799 to the
U.S. dollar, or 92.60 U.S. cents, strengthening from an
overnight low at C$1.0855 to the U.S. dollar, or 92.12 U.S.
 Still, it is down slightly from C$1.0778 to the U.S.
dollar, or 92.78 U.S. cents, at Monday's close.
 The Canadian data calendar is light until the employment
figures for October are released on Friday, leaving the
currency vulnerable to outside influences.
 This week also features policy announcements from several
major central banks, including the U.S. Federal Reserve, which
begins its two-day meeting on interest rates on Tuesday.
 Canadian bond prices edged up across the curve in a flight
to safety as stock markets weakened.
 Some influence may come from U.S. factory orders for
September at 10 a.m. EST (1500 GMT) as investors monitor data
to gauge the strength of an economic recovery. Economists
expect orders to rise 0.8 percent, compared with a 0.8 percent
fall in the prior month.
 The two-year bond CA2YT=RR rose 3 Canadian cents to
C$99.70 to yield 1.397 percent, while the 10-year bond
CA10YT=RR gained 25 Canadian cents to C$102.75 to yield 3.410
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)