CANADA FX DEBT-C$ bounces off 1-week high

Mon Feb 14, 2011 8:39am EST
 
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 * C$ slips to $1.0114
 * Bond prices mildly softer
 TORONTO, Feb 14 (Reuters) - The Canadian dollar slipped
from its highest level in more than a week against the U.S.
currency on Monday, but was a relative outperformer as the euro
sold off on concerns about the restructuring of a German bank.
 At 8:22 a.m. (1522 GMT), the currency CAD=D4 was at
C$0.9887 to the U.S. dollar, or $1.0114, down from Friday's
North American session close at C$0.9868 to the U.S. dollar, or
$1.0134.
 It managed to rise as high as C$0.9850 to the U.S. dollar,
or $1.0152, but bounced off its highest level since Feb. 4, as
investors were put on edge by the euro's fall.
 The euro slipped to a three-week low against the U.S.
dollar, hit by reports that rescue plans for ailing lender
WestLB were under threat, and with euro zone peripheral debt
concerns keeping investors on edge. [FRX/]
 Meanwhile, the price of oil, often a key sentiment
indicator for the the commodity-driven Canadian currency, was
slightly softer on the day.
 "The drop in oil prices hasn't seemed to be hurting the
Canadian dollar at all, which is probably offset by selling of
euro/Cad... which could give the Canadian dollar a bit of
support," said Michael O'Neill, managing director at
Knightsbridge Foreign Exchange.
 O'Neill said the technicals on the Canadian dollar were
still bullish, saying another test of C$0.9850 area was
possible. If broken, he said he was eying C$0.9830, which is
two ticks firmer than the 2011 high. He put U.S. dollar
resistance at C$0.9890.
 But with without any economic releases due on Monday, the
Canadian dollar could remain hemmed in this range, he said.
 Canadian government bonds were mildly weaker, with world
stocks inching towards last week's 30-month high.
 The two-year Canadian government bond CA2YT=RR was off 5
Canadian cents to yield 1.932 percent, while the 10-year bond
CA10YT=RR fell 8 Canadian cents to yield 3.482 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)