CANADA FX DEBT-C$ sags ahead of Bank of Canada rate decision

Tue Dec 8, 2009 8:05am EST
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 * Canadian dollar slips to 94.91 U.S. cents
 * Bank of Canada expected to hold rates steady
 By Jennifer Kwan
 TORONTO, Dec 8 (Reuters) - The Canadian dollar sagged on
Tuesday morning, pressured by weak commodity prices and
investor aversion to risk, while trade was muted ahead of the
Bank of Canada rate decision.
 The central bank is seen keeping rates near zero when it
makes its scheduled rate-setting announcement at 9:00 a.m.
(1400 GMT) on Tuesday, and committing to do so until at least
July, despite evidence the economy is kicking back to life.
 "The general mood this morning is risk off, which is
typically not good for the Canadian dollar," said Shaun
Osborne, chief currency strategist, TD Securities.
 However, the Canadian dollar could gain later in the
session if the the message from the bank is "somewhat
constructive at least on the outlook," given recent domestic
economic data, he added.
 Data on Friday showed Canada's economy added five times
more workers than expected in November. [ID:nN04141170]
 Adding to optimism about the Canadian outlook was a report
on Monday that showed the value of building permits shot up 18
percent in October. Analysts in a Reuters poll had forecast, on
average, a mere 1 percent rise. [ID:nN073438]
 At 7:41 a.m. (1241 GMT), the Canadian dollar was at
C$1.0536 to the U.S. dollar, or 94.91 U.S. cents, down slightly
from Monday's finish at C$1.0529 to the U.S. dollar, or 94.98
U.S. cents.
 Global shares were largely flat on Tuesday and the U.S.
dollar struggled after Federal Reserve Chairman Ben Bernanke
gave a cautious assessment of the world's largest economy.
 Oil prices, a key Canadian export, fell below $73 a barrel
on Tuesday, extending losses the previous day, while gold was
also under pressure. [O/R] [GOL]
 Canadian bond prices were mostly higher across the curve on
Tuesday, mimicking gains in U.S. Treasuries on the lingering
effect of Bernanke's comments, which splashed cold water on
hope of a rapid recovery. [US/] [ID:nN07169826]
 (Reporting by Jennifer Kwan, Editing by Chizu Nomiyama)