CANADA FX DEBT-C$ little changed, bonds up as equities fall

Tue Apr 7, 2009 4:54pm EDT
 
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 * C$ up slightly on higher gold prices
 * Bonds rise as Toronto stocks slide
 * Market focus on Thursday's Canadian jobs data
 (Updates to close, adds details, quotes)
 By Jennifer Kwan
 TORONTO, April 7 (Reuters) - The Canadian dollar finished
just slightly higher against the greenback on Tuesday,
supported by firmer gold prices but pressured by sliding equity
markets and lower oil prices.
  "The Canadian dollar has been buffeted on the strong side
by higher gold and metal prices," said Brian Dolan, chief
currency strategist at Forex.com. "On the other side, (it has
been hurt) by stock market price declines leading to risk
aversion and demand for U.S. dollars."
 Also pressuring the Canadian dollar was a skid in oil
CLc1 prices to below $50 a barrel. [ID:nSP219544]
 The currency finished at C$1.2378 to the U.S. dollar, or
80.78 U.S. cents, edging up from C$1.2385 to the U.S. dollar,
or 80.74 U.S. cents, at Monday's close.
 With little economic data of note on Tuesday, the currency
tracked movements in equity markets. At midday, when stocks
temporarily bounced off their lows, the Canadian dollar shot as
high as C$1.2331 to the U.S. dollar, or 81.09 U.S. cents, up
from an early low of C$1.2486 to the U.S. dollar, or 80.08 U.S.
cents.
 "Some moderation in risk aversion supported the initial
move stronger in the Canadian dollar and as it moved stronger
it tested the overnight low," said Matthew Strauss, senior
currency strategist at RBC Capital Markets.
 Canadian housing starts data for March is due for release
on Wednesday morning, but the week's key piece of economic data
comes on Thursday with Canada's March jobs figures.
 The Canadian economy is expected to have shed 55,000 jobs
in March following a loss of 82,600 jobs in February, which
would further support the widespread view that the economy
contracted sharply in the first quarter of 2009.
 BOND PRICES HIGHER
 Canadian government bond prices followed the bigger U.S.
Treasury market higher as North American equity markets
slumped. [ID:nN07458506]
 U.S. stocks tumbled on Tuesday, in part, on concern over
what is expected to be another bleak earnings season
[ID:nN07474070], while Toronto stocks fell on lower oil prices
and renewed worries about toxic assets in the global banking
industry.
 The two-year Canada bond was up 6 Canadian cents at
C$100.27 to yield 1.122 percent, while the 10-year bond rose 38
Canadian cents to C$106.98 to yield 2.947 percent.
 The 30-year bond was up 75 Canadian cents at C$123.15 to
yield 3.673 percent. In the United States, the 30-year Treasury
yielded 3.7157 percent.
 Canadian bonds underperformed their U.S. counterparts at
the short end, but outperformed at the long end. The 30-year
bond yield was 4.27 basis points below its U.S. counterpart,
compared to 1.70 basis points on Monday.
 (Additional reporting by Frank Pingue; editing by Peter
Galloway)