CANADA FX DEBT-C$ slips as Europe economy, oil weighs

Fri May 14, 2010 8:27am EDT
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   * C$ falls to 97.32 U.S. cents
 * Bond prices gain across the curve
 TORONTO, May 14 (Reuters) - The Canadian dollar slipped for
a second session against the U.S. dollar on Friday, weighed
down by the debate on how deeply global economic growth could
be affected by euro zone austerity measures.
 The Canadian dollar has attracted attention lately as a
safer play in the global landscape because Canada's relatively
strong fundamentals and a recent streak of data highlighting a
faster-than-expected economic recovery.
 However, falling crude oil prices, partly due to swollen
U.S. crude inventories, have outweighed the fundamentals
because of the long-term questions on the European economy. The
Canadian dollar often takes direction from the price of oil
because of Canada's status as an net exporter of oil.
  At 8:15 a.m. (1215 GMT), the Canadian dollar CAD=D4  was
at C$1.0275 to the U.S. dollar, or 97.32 U.S. cents, down from
C$1.0205 to the U.S. dollar, or 97.99 U.S. cents, at Thursday's
 "What we are seeing now is a more intense focus on what's
going on in the UK, what's going on in peripheral Europe with
regard to the fiscal austerity and what impact that might have
on growth prospects," said David Watt, senior currency
strategist at RBC Capital Markets.
 "That seems to be now starting to have more of a definitive
impact, not necessarily on risk sentiment, but (on the
question) is Canada at parity, when the global economy is less
certain than it was before, reasonable?"
 Still, the Canadian dollar held at multiyear highs against
the euro and sterling.
 Canadian government bond prices climbed across the curve,
following U.S. Treasuries, as the allure of safe-haven
government debt gained on the long-term fears related to the
euro zone economic outlook.
 The two-year government bond CA2YT=RR surged 9 Canadian
cents to C$99.23 to yield 1.887 percent, while the 10-year bond
CA10YT=RR jumped 30 Canadian cents to C$100.25 to yield 3.471
 (Reporting by Ka Yan Ng; Editing by Theodore d'Afflisio)