CANADA FX DEBT-C$ ends lower for third straight session

Mon Aug 10, 2009 4:28pm EDT
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 * C$ hits lowest level since July 29
 * Impact of Friday's weak jobs data lingers
 * Bond prices higher across curve
 (Recasts to close)
 By Frank Pingue
 TORONTO, Aug 10 (Reuters) - Canada's currency closed lower
versus the greenback on Monday as investors continued to trade
on last week's disappointing Canadian jobs report due to the
lack of any fresh data to influence direction.
 The selloff began early in the session and eventually
knocked the currency to C$1.0929 to the U.S. dollar, or 91.50
U.S. cents, its lowest level in nearly two weeks. The Canadian
dollar moved off the session low but was unable to snap a skid
that has now seen it close lower in three straight sessions.
 "It's a continuation of a trend, this is the third straight
day that we have seen softening so there is at least a modest
technical trend in place," said Eric Lascelles, chief economics
and rates strategist at TD Securities.
 "And when I look at stock markets I see that equities are
down a little and that may have prompted a modest safe haven
bid that's leaving the Canadian dollar out in the cold."
 The Canadian dollar closed at C$1.0887 to the U.S. dollar,
or 91.85 U.S. cents, down from C$1.0823 to the U.S. dollar, or
92.40 U.S. cents, at Friday's close.
 The slide comes on the heels of a report on Friday that
showed the Canadian economy shed 44,500 jobs in July, more than
double the market forecast. [ID:nN07253705]
 George Davis, chief technical strategist at RBC Capital
Markets, said the Canadian dollar'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]
 The Canadian currency's fall built on a 0.4 percent slide
last week, a move driven by the jobs report and comments from
Finance Minister Jim Flaherty, who warned that steps could be
taken to slow the ascent of the Canadian dollar if it became
overly strong.
 Canadian bond prices all ended higher and reclaimed losses
suffered during Friday's session as investors exited North
American equities and moved back into more secure government
 In Toronto, the S&P/TSX composite index .GSPTSE fell
91.66 points to 10,793.67, while in New York the Dow Jones
industrial average .DJI ended down 32.12 points at 9,337.95.
 The rise in bond prices comes ahead of a slew of economic
markers this week, including the U.S. Federal Reserve's
statement on interest rates and the state of the economy, as
well as U.S. government figures for monthly retail sales.
 In Canada, July housing starts data will be released on
Tuesday, followed by Wednesday's release of June merchandise
trade figures, and Friday's June manufacturing sales data.
 Dealers will also keep watch 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 ended up 13 Canadian cents at
C$99.17 to yield 1.411 percent, while the 10-year bond rose 50
Canadian cents to C$101.60 to yield 3.555 percent.
 The 30-year bond gained 75 5 Canadian cents to C$116.05 to
yield 4.034 percent. In the United States, the 30-year bond
yielded 4.522 percent.
 Canadian bonds underperformed their U.S. counterparts
across most of the curve. The Canadian 30-year bond was about
48.8 basis points below the U.S. 30-year yield, versus about
53.4 basis points below on Friday.
 (Editing by Peter Galloway)