CANADA FX DEBT-C$ flat; commodities, euro zone in focus

Mon May 9, 2011 9:39am EDT
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 * C$ at C$0.9670 vs US$, or $1.0341
 * Bonds edge higher across curve
 By Claire Sibonney
 TORONTO, May 9 (Reuters) -  The Canadian dollar was little
changed against the greenback on Monday morning, caught between
renewed fears about European sovereign debt and a rebound in
beaten down commodity prices.
 European shares extended falls in afternoon trade after
ratings agency Standard & Poor's further downgraded Greece's
credit rating to B from BB-minus. [MKTS/GLOB]
 "The disconnect between the rising price of energy and
metals and the drop in European equity markets, the currency
market itself is biased at the moment for a risk bid by virtue
of the weakness of the U.S. dollar and Japanese yen," said Jack
Spitz, managing director of foreign exchange at National Bank
Financial. "It's still undecided in terms of where to take
currency valuations given last Thursday and Friday's massive
short squeeze in the euro."
  Oil rebounded by more than $4, helped by a weaker dollar
as the euro strengthened and bargain hunting by traders, while
gold climbed back above $1,500 an ounce and silver rallied more
than 6 percent. [O/R] [GOL/]
 "There have been bounces on some of those markets but the
U.S. dollar itself is prime for a continued short squeeze so we
could be seeing more U.S. dollar gains which could ultimately
reflect itself in more bids in dollar/Canada as well," added
 At 9:26 a.m. (1326 GMT), the Canadian dollar stood at
C$0.9670 to the U.S. dollar, or $1.0341, exactly the same level
as Friday's North American session close.
 Spitz said near-term support for the Canadian dollar was
seen up to C$0.9720.
 With no major data on Monday, Canadian housing starts --
which unexpectedly slipped 3.1 percent in April -- weighed
slightly. [ID:nN09216730]
 A slew of economic data from China, European inflation
figures and North American trade figures later in the week is
expected to provide further direction.
 Canadian bond prices picked up across the curve, reversing
an earlier decline.
 The two-year Canadian government bond CA2YT=RR was up 2
Canadian cents to yield 1.655 percent, while the 10-year bond
CA2YT=RR added 6 Canadian cents to yield 3.188 percent.
 (Reporting by Claire Sibonney; Editing by Theodore d'Afflisio)