CANADA FX-C$ eases against greenback as Irish crisis flares

Thu Nov 11, 2010 4:45pm EST
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   * C$ falls to 99.68 U.S. cents
 * Touched highest level since April before falling
 * Crisis erupts in Ireland, pushing its bond spreads out
 * North American bond markets closed for holiday
 (Updates to close, adds commentary)
 By Claire Sibonney
 TORONTO, Nov 11 (Reuters) - Canada's currency eased against
the U.S. dollar on Thursday but shot up against the euro in
thin trading, as fresh European debt fears spurred investors to
seek solace in the greenback.
 Yields on 10-year Irish bonds rose to a record high over
comparable German debt as some investors worried that Ireland
wouldn't be able to cut spending as planned and may require a
bailout, sending the euro tumbling against the U.S. currency.
 The prospect of a fresh European debt crisis prompted many
traders to dump riskier assets and move their capital back into
U.S. dollars.
 "What's really going on is euro. Euro is getting sold,
hard," said Firas Askari, head of foreign exchange trading at
BMO Capital Markets. "Canada is following the euro story but
it's not selling off as much as it should."
 The Group of 20 meeting in South Korea -- which is trying
to sort out disagreements over currency policy -- produced
little market direction as leaders struggled to agree on
meaningful action to rebuild the global economy as the crisis
erupted in Ireland. [ID:nTOE6AA0BQ]
 The Canadian dollar CAD=D4 closed the North American
session at C$1.0032 to the U.S. dollar, or 99.68 U.S. cents,
down from its finish exactly at par on Wednesday.
 Against the euro, the Canadian dollar hit a high C$1.3688
or 73.05 euro cents, its strongest level since September.
 Earlier the currency had been supported by reports of
strong Chinese growth, which boosted commodity prices,
including copper, which raced to a record high. [MET/L]
 It hit an overnight session high of 99.77 Canadian cents to
the U.S. dollar, or $1.002, briefly breaking a key resistance
level at 99.80 Canadian cents to reach its best level since
 "It's holding in quite significantly and it's going to draw
the attention of some money managers," said Askari.
 He noted there was little liquidity on Thursday, given
Canada's Remembrance Day and U.S. Veteran's Day holidays which
have closed bond markets. Most action on the crosses was
Canadian dollar buying against the euro, he added.
 Askari pointed to 99.31 Canadian cents to the greenback,
the 2010 high reached in April, as the next key resistance
level for the Canadian dollar. On the support side, he was
eyeing C$1.0080.
 Many market watchers, however, were hesitant to call parity
again in the near term.
 Adam Cole, global head of FX strategy at RBC Capital
Markets, said he couldn't single out a short term catalyst that
would bring Canada back to one-for-one footing.
 "But it's probably only a question of time before we do
because the fundamental backdrop in Canada is still a very
strong one," he said.
 (Editing by Jeffrey Hodgson)