CANADA FX DEBT-Growth concerns keep C$ grounded

Mon Jun 6, 2011 11:17am EDT
 
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   * C$ flat vs US$ at C$0.9783, or $1.0222
 * Canada April building permits plunge 21.1 pct
 * Bond prices lower
 (Adds details)
 By John McCrank
 TORONTO, June 6 (Reuters) - Canada's dollar was flat
against the U.S. currency on Monday morning as lower oil prices
and lingering doubts about the economy of Canada's main trading
partner -- the United States -- kept it from gaining traction.
 The price of U.S. crude oil was down more than 1 percent at
$99.22 a barrel on worries of a slowdown in economic growth.
[O/R] [ID:nN06323773]
 Canada is the top oil exporter to the United States, which
absorbs around three-quarters of all Canadian exports.
 "There are concerns that the U.S. economy just can't
maintain momentum at all," said David Watt, senior currency
strategist at RBC Capital Markets.
 A report on Friday showed U.S. nonfarm payrolls rose far
less than expected in May and the U.S. jobless rate rose to 9.1
percent. The Canadian dollar sank to its weakest level since
March 21 after the data was released.
 The U.S. dollar rallied in March, but has had a lackluster
performance since then and the only major currency that has not
made up its losses against the greenback is the Canadian
dollar, Watt said.
 At 10:35 a.m., the Canadian dollar [CAD=D4] was at C$0.9783
to the U.S. dollar, or $1.0222, equal to its North American
session close on Friday.
 Against the euro on Monday  it fell as low as $1.4368, its
weakest point since February 2010.
 Market players have been pushing out their forecasts for
when the Bank of Canada will resume raising interest rates as
North American economic data has generally disappointed. The
central bank increased rates three times last year, stopping in
September at 1 percent.
 A recent Reuters poll of primary dealers showed that they
expect Canadian interest rates to rise in September. [CA/POLL]
A poll a month earlier forecast the Bank of Canada would resume
tightening in July.
 Adding to concerns about the outlook for North American
growth, a report on Monday showed that the value of Canadian
building permits plunged 21.1 percent in April. The market had
expected ad 6.0 percent decline. [ID:nN06254333]
 Market players will turn their focus to Canadian data on
trade and employment later in the week. [ECONCA]
 The Canadian government's budget, due to be presented after
market close on Monday, will also be in the spotlight. Finance
Minister Jim Flaherty has said it will be largely the same as
the one he introduced in March. The minority Conservative
government was brought down before that one could be passed.
The Conservatives won a majority in the May election and
passage of their budget is now assured.
 Canada's two-year bond [CA2YT=RR] was down 1 Canadian cent
to yield 1.442 percent, while the 10-year bond [CA10YT=RR] was
down 15 Canadian cents to yield 3.013 percent. The 30 year bond
[CA30YT=RR] was down 54 Canadian cents with a yield of 3.503.
 (Reporting by John McCrank; editing by Peter Galloway)