CANADA FX DEBT-C$ trampled in commodity retreat, bonds gain

Thu May 5, 2011 4:50pm EDT
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   * C$ ends at C$0.9682 to US$, or $1.0328
 * U.S. crude plunges more than $9
 * Silver and gold prices sink
 * Bond prices extend gains in flight to safety
 (Updates to close, adds details, quotes)
 By Claire Sibonney
 TORONTO, May 5 (Reuters) - The Canadian dollar fell to its
lowest level against the U.S. dollar in more than two weeks on
Thursday as the wave of selling across commodity markets
accelerated on weak economic data and a discouraging outlook.
 Dragging on Canada's resource-linked currency, U.S. crude
oil futures lost more than $9, settling below $100 a barrel for
their lowest close since mid-March, as signs of slowing global
growth and more policy tightening in China spooked investors.
 Bullion prices also fell, with silver plunging 10 percent,
marking its biggest one-day loss since 1980, while gold skidded
more than 3 percent lower. [ID:nLDE7440RL]
 The Canadian dollar CAD=D4 ended the North American
session at C$0.9682 to the U.S. dollar, or $1.0328, down from
Wednesday's North American finish of C$0.9585 to the U.S.
dollar, or $1.0433. Earlier it fell as low as C$0.9713 to the
U.S. dollar, or $1.0295, its softest point since April 18.
 "The Canadian dollar is holding up better than you'd expect
given the what's happening in the commodity world. It's amazing
just to see the absolute collapse today," said Jacqui Douglas,
senior currency strategist at TD securities.
 "CAD's not doing great but I guess there are bigger fish to
fry right now for currency markets. The focus seems to be
what's happening with the euro."
 The euro plunged across the board after comments from the
head of the European Central Bank suggested interest rates were
unlikely to rise next month. [ID:nN05513328]
 The uncertainty over interest rates also weighed on the
Canadian dollar and other risk-related currencies compared with
the safe-haven greenback.
 Weak economic data from Europe and the United States fed
concerns that have battered commodities all week. German
industrial orders fell unexpectedly in March while U.S. weekly
jobless claims hit eight-month highs. [ID:nLDE74414K]
 "I think that this Canadian dollar bull trend had continued
on for so much time that I'm not surprised to see a little bit
of a pullback here," said C.J. Gavsie, managing director of
foreign exchange sales at BMO Capital Markets.
 According to a Reuters poll of foreign exchange strategists
released on Thursday  the Canadian dollar CAD=D4 is set for a
gradual and modest descent over the next 12 months. But the
median forecast is for the currency to stay well above parity
with the greenback. [CAD/POLL]
 Gavsie said that after the currency broke through its
50-day moving average, the next support level is the April 18
low of C$0.9722.
 Mixed Canadian economic indicators on Thursday that showed
an unexpected spike in March building permits and a drop in
April purchasing activity were overshadowed by the global
worries and commodity retreat. [ID:nN05280781]
 Next in focus are April employment reports from the United
States and Canada.
 "Dollar/Canada just seems to be stuck here, it doesn't seem
to want to go too much higher, which is a good thing," added
TD's Douglas.
 "I think markets are probably just waiting for the
employment numbers tomorrow before making any big moves.
There's always that risk that we come out with one of those
crazy blockbuster employment numbers."
 Analysts predict a gain of 22,500 jobs in Canada last
month. The report will show whether the economy rebounded from
March's lackluster job growth -- the weakest in six months --
and whether the dramatic rise in full-time positions was
sustained. [ID:nN29144982]
 Canadian government bond prices were firmer across the
curve on Thursday, tracking U.S. Treasuries. [US/]
 The two-year bond CA2YT=RR was up 6 Canadian cents to
yield 1.652 percent, while the 10-year bond CA10YT=RR rallied
29 Canadian cents to yield 3.181 percent.
 (Reporting by Claire Sibonney; editing by Rob Wilson)