CANADA FX DEBT-C$ sags as oil dips, greenback firms

Fri Jan 15, 2010 9:26am EST
 
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 * Ticks lower at C$1.0255 per US$, or 97.51 U.S. cents
 * Lower commodity prices pressure C$
 * Bonds prices flat to higher
 By Jennifer Kwan
 TORONTO, Jan 15 (Reuters) - The Canadian dollar sagged
against the U.S. currency on Friday morning as key commodity
prices limped lower and the unit pulled back after touching a
three month high.
 Oil, a key Canadian export, slipped to below $79 a barrel
on Friday on the lingering effects of disappointing U.S.
economic data, released in the previous session, and
expectations for reduced heating demand in the United States.
Gold was also weaker. [O/R] [GOL/]
 The Canadian dollar also ticked lower as the greenback held
gains versus the euro on Friday after data showed U.S. consumer
prices rose more slowly than expected in December and
manufacturing growth in the New York State accelerated.
[ID:nN14198653] [ID:nN15208010].
 Despite the slightly bearish picture for the Canadian
dollar, the commodity-linked currency was holding in well, said
Firas Askari, head of foreign exchange trading at BMO Capital
Markets.
 "It looks like it's languishing against the U.S. dollar but
it's actually doing well against every other currency," he
said. He added the Canadian currency is generally attractive
right now due to a broader bullish commodity outlook and
Canada's fiscal restraint compared to many of its peers.
 At 9:11 a.m. (1411 GMT), the Canadian dollar was at
C$1.0255 to the U.S. dollar, or 97.51 U.S. cents, down from
Thursday's finish at C$1.0234 to the U.S. dollar, or 97.71 U.S.
cents.
 "You've got two divergent forces going on here: you've got
euro selling off, which is causing the U.S. dollar to be bid
and technical levels that have been broken in dollar/Canada
that argue for a higher Canadian dollar," said Askari.
 On Thursday, the Canadian dollar shot up to C$1.0225 to the
U.S. dollar, or 97.80 U.S. cents, the highest intraday level
since Oct. 15.
 Many traders are now watching the C$1.0207 level. If the
currency broke through this it would be at its highest since
July, 2008.
 Canadian bond prices were most higher and moved in sync
with U.S. Treasuries, which climbed in Europe on Friday as
markets digested a successful $13 billion bond auction the
previous day. Treasuries added to gains after tame U.S.
inflation data. [US/]
 (Editing by Jeffrey Hodgson)