CANADA FX DEBT-C$ falls to two-week low, bonds edge higher

Tue Aug 11, 2009 8:16am EDT
 
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 * C$ hits lowest level since July 23
 * Bond prices edge up across the curve
 TORONTO, Aug 11 (Reuters) - Canada's currency fell to a
two-week low on Tuesday morning, extending a three-day slide as
traders squared positions ahead of data and the U.S. Federal
Reserve's policy announcement.
 Part of the slide was due to continued disappointment
stemming from last week's dismal Canadian jobs report.
 Steady commodity prices and flat U.S. stock futures
provided little impetus to trade.
 The biggest news event is the U.S. Federal Reserve's
two-day policy meeting, which begins on Tuesday. The central
bank is expected to keep its fed funds rate at 0-0.25 percent.
[ID:nN07416548]
 Traders will also cast an eye on Canadian housing starts
CAHSTA=ECI  for July.
 At 7:50 a.m. (1150 GMT), the Canadian unit was at C$1.0959
to the U.S. dollar, or 91.25 U.S. cents, down from C$1.0887 to
the U.S. dollar, or 91.85 U.S. cents, at Monday's close.
 "There has been no fundamental change or shift in the way
the world views the Canadian economy or the Canadian dollar. I
think it's just simply a technical retracement and a pullback
of risk ahead of a fairly large slate of data," said Jack
Spitz, managing director of foreign exchange at National Bank
Financial.
 Other data is mainly from south of the border where
investors will look for further evidence of an economic
recovery.
 Later in the session, traders will take in productivity and
unit labor costs data for the second quarter, wholesale
inventories for June, and ABC News' consumer comfort index for
the week ended Aug. 9.
 Canadian bond prices were slightly higher across the curve
ahead of the economic markers this week, including the Fed's
statement on interest rates and the state of the economy.
 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 edged up 1 Canadian cent to
C$99.18 to yield 1.407 percent, while the 10-year bond rose 8
Canadian cents to C$101.70 to yield 3.542 percent.
 The 30-year bond gained 10 Canadian cents to C$116.15 to
yield 4.029 percent. In the United States, the 30-year bond
yielded 4.502 percent.
 (Reporting by Ka Yan Ng)