CANADA FX DEBT-C$ down on weak oil, building permits data

Mon Apr 6, 2009 5:25pm EDT
 
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 * C$ lower after rising for four straight sessions
 * Hurt by February building permits' 15.9 percent drop
 * Bond prices mostly lower on supply concerns
 (Updates to close, adds details, quotes)
 By Jennifer Kwan
 TORONTO, April 6 (Reuters) - The Canadian dollar weakened
on Monday, pressured by a drop in the price of oil and weaker
than expected economic data that increased expectations the
Bank of Canada will take further action to spur growth.
 The value of building permits in February fell by a far
greater-than-expected 15.9 percent, Statistics Canada said.
[ID:nN06293340]
 That data was seen as helping to push Canada's central bank
-- which has already cut rates to a historic low of 0.5 percent
-- to lower them even further or embark on nonconventional
methods to ease credit, sometimes known as quantitative
easing.
 "The building permits number was particularly dismal," said
Michael Gregory, senior economist at BMO Capital Markets.
  The prospect weakened the Canadian unit as "ultimately,
quantitative easing means printing lots of money supply,"
Gregory said.
 Bank of Canada Governor Mark Carney reiterated in a speech
last week that he would outline a framework on April 23 for
credit and "quantitative" easing, which analysts believe could
involve printing money to buy securities outright in the
market. [ID:nN01263139]
 The Canadian currency retreated shortly after the building
permits data and continued its descent to touch C$1.2442 to the
U.S. dollar, or 80.37 U.S. cents.
 The Canadian unit finished at C$1.2385 to the U.S. dollar,
or 80.74 U.S. cents, down from Friday's session close of
C$1.2304 to the U.S. dollar, or 81.27 U.S. cents.
 A fall on the Toronto stock market on Monday, after four
weeks of gains, also tarnished the currency. [MKTS/GLOB]
 Also pressuring the Canadian dollar on Monday was a fall in
the oil price CLc1 to $51.05 a barrel. Oil, a major Canadian
export, retreated with global equity markets on concern about
the banking sector. [ID:nSIN491212]
 Toronto's financial group dropped along with U.S.
financials after a Calyon Securities analyst initiated coverage
on some large U.S. banks with "underperform" or "sell" ratings.
[ID:nN06322858]
 BONDS FLAT TO LOWER
 Canadian government bond prices were lower as supply
concerns overcame the positive market factors of falling
equities and weak domestic economic data. [ID:nN06396148]
 "It's basically at the back end a function of supply that
appears to be causing a weakness in prices and some push up in
yields," said Mark Chandler, fixed income strategist at RBC
Capital Markets.
 The supply concerns undermined the building permits data as
well as the Ivey Purchasing Managers Index, which fell to 43.2
in March from 45.2 in February. [ID:nN06392945]
 The two-year Canada bond was flat at C$100.22 to yield
1.145 percent, while the 10-year bond fell 60 Canadian cents to
C$106.55 to yield 2.995 percent.
 The 30-year bond retreated C$1.05 to C$122.35 to yield
3.713 percent. In the United States, the 30-year Treasury
yielded 3.7336 percent.
 Canada bonds mostly outperformed their U.S. counterparts.
The 30-year bond yield at 2.10 basis points below its U.S.
counterpart, compared with 2.60 basis points above on Friday.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)