CANADA FX DEBT-C$ sags as euro zone concerns dims risk bid

Tue Dec 15, 2009 8:12am EST
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 * C$ lower at C$1.0639 to the U.S. dollar
 * Bond prices lower across curve
 TORONTO, Dec 15 (Reuters) - Canada's currency sank on
Tuesday morning as investor thirst for risk waned on generally
softer commodity prices and as global equities retreated on
concerns about the health of the euro zone's economic
 The euro hit a 2-1/2-month low against the dollar on
Tuesday, stung by concerns about the health of euro zone banks,
while a slip in German economic sentiment also prompted traders
to dump the single currency. [FRX/]
 The concerns swirled around a survey of German analyst and
investor sentiment, Austria's banking sector and Greece's
emergency deficit-cutting plan, pressuring global stocks.
 "We are seeing a little bit of a risk off trade today,"
said Doug Porter, deputy chief economist, BMO Capital Markets.
 "What we've seen in recent weeks is rippling concerns
around the euro area, whether it's sovereign risk concerns or
banking concerns. That's a story that doesn't seem to want to
go away."
 At 7:58 a.m. (1258 GMT), the Canadian unit was at C$1.0639
to the U.S. dollar, or 93.99 U.S. cents, down from Monday's
close at C$1.0593 to the U.S. dollar, or 94.40 U.S. cents.
 "The other story besides the so-called risk-off is the fact
that we've seen oil prices sliding for the better part of two
weeks now without stop," he said.
 Oil prices eked out slim gains and hovered just below $70 a
barrel after falling nine straight days, while gold prices were
up lower. [O/R] [GOL/] Both oil and gold are key Canadian
exports whose prices often influence the country's currency.
 Canadian bond prices were slightly lower across the curve
on Tuesday.
 "I believe there's just a little bit of catch up," said
Porter. "U.S. bond yields got well above those in Canada and I
think we're starting to see the Canadian yields move up towards
the U.S. levels."
 (Reporting by Jennifer Kwan; Editing by Theodore d'Afflisio)