CANADA FX DEBT-C$ turns lower, bonds up, on U.S. data

Fri Aug 14, 2009 1:36pm EDT
 
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 * C$ sags to C$1.0973, or 91.13 U.S. cents
 * Bond prices rise with U.S. market on U.S. data
 * U.S. consumer confidence at lowest level since March
 * Canadian manufacturing shipments jump 1.9 pct
 (Adds details, updates prices)
 By Ka Yan Ng
 TORONTO, Aug 14 (Reuters) - The Canadian dollar turned
lower versus the U.S. currency on Friday, pressured by renewed
concerns about the economic recovery arising from worsening
U.S. consumer confidence.
 The currency's fall centered on the Reuters/University of
Michigan preliminary August consumer sentiment survey that
dropped to 63.2 from 66.0 in July, its lowest level since March
and well below median expectations of a reading of 68.5.
[ID:nN14294408]
 "What it has introduced into the market is a bit more
caution in terms of just how quickly the U.S. economy is going
to rebound," said Paul Ferley, assistant chief economist at
Royal Bank of Canada, adding that the confidence report was one
of several disappointing data points in recent day.
 Earlier this week, U.S. retail sales unexpectedly slipped
and there were more indicators that the weak U.S. labor market
was struggling to stabilize.
 At 1:15 p.m. (1715 GMT), the Canadian currency was at
C$1.0973 to the U.S. dollar, or 91.13 U.S. cents, down from
C$1.0890 to the U.S. dollar, or 91.83 U.S. cents, at
Thursday's close.
 The confidence figures also hit the Canadian dollar's
correlated markets of oil and stock markets, adding further
pressure to the commodity-linked currency.
 The price of oil, a key Canadian export, dropped below $68
a barrel, while North American equity markets slumped.
 Early in the session, data showing mild U.S. inflation
[ID:nN13244265] and a jump in Canadian manufacturing shipments
[ID:nN14293720] had helped the Canadian dollar edge higher.
 BONDS SURGE
 Canadian bond prices were higher across the curve,
following the U.S. Treasury market, which rose on the mild
consumer inflation data, which led the  market to believe that
the U.S. Federal Reserve will keep interest rates low for some
time.
 Gains extended with the poor consumer confidence data and
as investors sought the relative safety of government bonds as
they exited equities.
 The two-year Canadian bond climbed 6 Canadian cents to
C$99.39 to yield 1.307 percent, while the 10-year bond rose 33
Canadian cents to C$102.33 to yield 3.466 percent.
 The 30-year bond increased 65 Canadian cents to C$117.75 to
yield 3.942 percent. In the United States, the 30-year bond
yielded 4.402 percent.