CANADA FX DEBT-C$ hits 2-week low on commodities sell-off
* C$ falls to C$0.9598 vs US$, or $1.0419
* Bond prices track Treasuries higher
By Claire Sibonney
TORONTO, May 4 (Reuters) - Canada's dollar retreated to a two-week low against the U.S. dollar on Wednesday, driven down by a slide in the price of U.S. crude oil and drops in other commodity prices.
The broad sell-off in commodities also dragged equities sharply lower as investor appetite for risk-taking shriveled due to concerns about a slowdown in the Chinese economy as well as a U.S. report that showed a sharp pullback in services sector growth in April. [MKTS/GLOB]
U.S. oil prices were also hit by inventory data showing a larger-than-forecast increase in crude stockpiles, and slipped below $110 a barrel. Silver was headed for its third day of losses. [O/R] [GOL/]
Conversely, the U.S. data helped push up safe-haven Canadian government bonds, which tracked U.S. Treasuries higher.
"The Canadian dollar being a commodity-based currency it seems to be taking a bit of a hit along with the Australian dollar," said John Curran, senior vice president at CanadianForex, a commercial foreign exchange dealing firm.
"It's a general strengthening of U.S. dollars in any case ... This move in commodities has hurt the Canadian dollar and probably caught a few people on the wrong foot."
The results of the Canadian general election on Monday, which gave the business-friendly Conservatives a stable majority government, initially pushed the Canadian dollar to a near 3-1/2 year high. But so so far the election has had little lasting impact despite market expectations it would allow the Canadian dollar to catch up with gains made recently by other commodity-supported currencies.
"People were hoping for a catch-up based on the election. That hasn't materialized, I believe it will in the near future," Curran said.
At 12:22 p.m. (1622 GMT), the Canadian dollar CAD=D4 was at C$0.9598 to the U.S. dollar, or $1.0419, down from C$0.9526 to the U.S. dollar, or $1.0498, at Tuesday's close.
Earlier, it touched its weakest level since April 19.
Curran said the next major trendline support level for the Canadian dollar is around C$0.9675.
The two-year bond CA2YT=RR was up 2 Canadian cents to yield 1.689 percent, while the 10-year bond CA10YT=RR gained 24 Canadian cents to yield 3.128 percent. (Editing by Peter Galloway)
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