CANADA FX DEBT-C$ weaker after touching 2009 high; oil weighs

Tue May 5, 2009 3:32pm EDT
 
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 * Canadian dollar falls from 2009 high as oil weakens
 * Bond prices mostly stronger
 (Adds details, quotes)
 By Jennifer Kwan
 TORONTO, May 5 (Reuters) - The Canadian dollar weakened
against the greenback on Tuesday after reaching its highest
level in nearly six months, pressured by a similar reversal in
the price of oil and soft equity markets.
 The currency has recently traded alongside equity and
commodity markets, which have risen as investors bought riskier
assets on optimism the global recession is easing.
 But North American equity markets were little changed to
softer on Tuesday, as some investors sold to secure recent
gains. And crude prices CLc1 fell after hitting a 2009 high
as bulging oil inventories and falling energy demand outweighed
fragile hopes for an economic recovery. [ID:nSP351504]
 "It's a bit of a pause after a sharp move but sentiment is
still in the market that dollar/Cad should head lower and the
Canadian dollar should still head higher," said David Watt,
senior currency strategist RBC Capital Markets.
 At 1918 GMT, the Canadian unit was at C$1.1759 to the U.S.
dollar, or 85.04 U.S. cents, down from C$1.1735 to the U.S.
dollar, or 85.22 U.S. cents, at Monday's close.
 Earlier in the session, the Canadian currency hit C$1.1677
to the U.S. dollar, or 85.64 U.S. cents, its highest since Nov.
10.
 Equity markets fell back and the U.S. dollar rebounded
ahead of Thursday's European Central Bank meeting and results
of stress tests on U.S. banks, which may show about half of the
19 biggest banks under review need to raise more capital.
[ID:nN04395186]
 With no major Canadian economic data out on Tuesday,
markets are watching for employment data, the Ivey Purchasing
Managers' Index, and housing reports later this week. As well,
U.S. employment figures are due on Friday.
 Canadian bond prices were mostly firmer. Bonds had been
flat to lower in recent days as equity markets rose to their
best levels in nearly six months.
 (Additional reporting Ka Yan Ng; Editing by Jeffrey Hodgson)