3 Min Read
* C$ extends last week's 0.4 pct drop
* The impact of Friday's weak Canadian jobs data lingers
* Bond prices higher across curve
By Frank Pingue
TORONTO, Aug 10 (Reuters) - Canada's dollar was slightly lower on Monday morning as a slide U.S. equity futures lent a bid to the greenback after a flat overnight session where most major currencies stuck within a tight range.
The fall extended last week's 0.4 percent drop, a move that was driven by a disappointing domestic jobs report and comments from Canadian Finance Minister Jim Flaherty, who warned that steps could be taken to slow the currency's ascent.
With no Canadian or U.S. data to consider, it appears as though the domestic currency's direction in Monday's session will be dictated largely by the performance of equity markets.
"Over the last hour or so we have seen U.S. equity futures start to sell off a bit and that's given the (U.S.) dollar a bit of a bid tone as risk aversion levels increased and so the Canadian dollar has come under a bit of selling pressure," said George Davis, chief technical strategist at RBC Capital Markets.
"Those are the themes that are going to drive the market, i.e. what equities do and what impact that's going to have on the major currencies and filter through into the Canadian dollar."
At 9:20 a.m. (1320 GMT), the Canadian unit was at C$1.0839 to the U.S. dollar, or 92.26 U.S. cents, down from C$1.0823 to the U.S. dollar, or 92.40 U.S. cents, at Friday's close.
Davis also said the currency's performance could hinge on the actions of the U.S. Federal Reserve, which ends a two-day policy meeting on Wednesday. The central bank is expected to keep its fed funds rate at 0-0.25 percent. [ID:nN07416548]
BOND PRICES HIGHER
Canadian bond prices moved higher across the curve as the turn lower in U.S. stock index futures revived interest in more secure assets like government debt.
Bond dealers will be keeping an eye on this week's U.S. Treasury auctions of $75 billion in three- and 10-year notes, along with 30-year bonds. The total of the auctions is a record size for a quarterly refunding.
The two-year Canadian bond was up 4 Canadian cents at C$99.08 to yield 1.456 percent, while the 10-year bond rose 20 Canadian cents to C$101.30 to yield 3.591 percent.
The 30-year bond was up 5 Canadian cents at C$115.35 to yield 4.072 percent. In the United States, the 30-year bond yielded 4.602 percent. (Editing by Theodore d'Afflisio)