CANADA FX DEBT-C$ sags to 3-month low as euro zone woes widen

Thu Feb 4, 2010 1:07pm EST
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 * C$ slips to 93.28 U.S. cents
 * Bonds higher on euro zone debt concerns
 By Claire Sibonney
 TORONTO, Feb 4 (Reuters) - The Canadian dollar weakened to
its lowest level in nearly three months on Thursday as fresh
credit worries in the euro zone hit investors' appetite for
riskier assets.
 Worries over the financial health of Portugal and Spain
have increased as investors speculate the two countries may
face similar problems over their budget deficits and debt as
Greece. [ID:nLDE6121AC]
 These concerns helped lift the safe-haven U.S. dollar to a
six-month high versus a currency basket. [FRX/]
 It's got a lot of people nervous, not prepared to go into
weekend-long risk, so we're just getting a wholesale
clear-out," said David Watt, senior currency strategist at RBC
Capital Markets.
 "Whether it's stock markets, credit markets, currency
markets and anything which has even a remote amount of risk to
it, is just getting pummeled."
 But Watt pointed out that the Canadian currency is not
doing as badly as others against the U.S. dollar, with the
euro, and New Zealand and Australian dollars also hitting
multi-month lows NZD=AUD=EUR=.
 At 12:26 p.m. (1726 GMT) the Canadian dollar was at C$1.072
to the U.S. dollar, or 93.28 U.S. cents, down from C$1.0624, or
94.13 U.S. cents, at Wednesday's close.
 The Canadian currency hit a session low of C$1.0753, or 93
U.S. cents, earlier, the lowest level since Nov 9.
 Investors are also awaiting U.S. and Canadian jobs data due
on Friday. Market players expect a net gain of jobs in Canada.
 Strong U.S. data this week supported this view ahead of key
non-farm payrolls numbers due on Friday, even as U.S. jobless
claims unexpectedly rose last week. ECON[ID:nN01230910]
 The other key agenda item on Friday is a speech by Bank of
Canada Governor Mark Carney to the Winnipeg Chamber of Commerce
at 1:45 p.m. EST (1845 GMT)
 Canadian government debt, like U.S. Treasury bonds, added
to gains after the surprise increase in U.S. weekly jobless
claims, which pointed to a labor market still under stress even
as the economy grows.  [ID:nN03175869]
 The two-year bond CA2YT=RR was up 15 Canadian cents at
C$100.455 to yield 1.275 percent, while the 10-year bond
CA10YT=RR gained 50 Canadian cents to C$103.050 to yield
3.365 percent.
 (Reporting by Claire Sibonney; editing by Rob Wilson)