CANADA FX DEBT-C$ falters on reduced risk appetite, bonds flat

Thu Nov 12, 2009 9:31am EST
 
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 * C$ slips to 95.28 U.S. cents
 * Bonds flat ahead of C$3 bln auction of two-yr notes
 TORONTO, Nov 12 (Reuters) - Canada's currency slipped from
a three-week closing high on Thursday as lighter risk appetite
was reflected in softer equity markets and commodity prices.
 The Canadian dollar, without much domestic news to sustain
influence, was likely to take direction from moves in other
currencies, such as the euro that failed to cement a break
above the key $1.50 level.
 Market watchers were also considering a meeting of
Asia-Pacific leaders and other Asian regional issues, including
a visit to China next week by U.S. President Barack Obama.
 The latest draft of a post-meeting communique from APEC
finance ministers called for "market-oriented" exchange rates
and interest rates -- effectively an argument for local
currencies to appreciate against the U.S. dollar.
[ID:nSP423373] [FRX/]
 Gold prices eased from record highs as the U.S. dollar
recovered, while oil prices were also lower ahead of a key U.S.
crude stocks report. Both commodities are key Canadian exports
and their prices often influence the direction of the Canadian
dollar. [GOL/] [O/R]
 The lower commodity prices were likely to weigh on
Toronto's main stock index, while retail giant Wal-Mart (WMT.N: Quote)
forecast earnings for the crucial holiday quarter could miss
estimates as its customers face rising unemployment.
 "Market attention seems to be diverted on two issues:
comments out of the People's Bank of China...and gold, which
continues to drive towards new highs," said Jack Spitz,
managing director of foreign exchange at National Bank of
Canada.
 "As far as dollar/Canada is concerned, it's just following
the broader flow in currency markets."    
 At 9:10 a.m. (1410 GMT), the Canadian dollar was at
C$1.0495 to the U.S. dollar, or 95.28 U.S. cents, down from
C$1.0461 to the U.S. dollar, or 95.59 U.S. cents, at
Wednesday's close, its highest close since Oct. 21.
 Overnight, the currency had slipped as low as C$1.0548 to
the U.S. dollar, or 94.80 U.S. cents.
 It pared losses after data showed new home prices in Canada
rose by a sharper-than-expected 0.5 percent in September from
August. [ID:nOTT003772]
 Canadian bonds were little changed across the curve ahead
of new supply and despite the weaker tone to equity markets.
 The two-year bond CA2YT=RR was down 2 Canadian cents at
C$99.67 to yield 1.415 percent, while the 10-year bond
CA10YT=RR fell 9 Canadian cents to C$101.88 to yield 3.516
percent.
 There is a C$3.0 billion auction of new two-year bonds at
noon (1700 GMT).
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)