CANADA FX DEBT-C$ edges lower on fresh European debt worries

Wed Jun 16, 2010 8:17am EDT
 
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 * C$ falls to C$1.0282, or 97.26 U.S. cents
 * Bond prices higher across the curve
 By Claire Sibonney
 TORONTO, June 16 (Reuters) -  The Canadian dollar slipped
against its U.S. counterpart on Wednesday, when euro zone debt
worries resurfaced as the European Commission denied a report
that the European Union, the IMF and the U.S. Treasury were
drawing up a liquidity plan for Spain.
 The newspaper report, citing plans for a credit line of up
to 250 billion euros ($335 billion) for Spain came a day after
successful European debt auctions encouraged fresh risk-taking
in financial markets. [ID:nLDE65F0GX]
 The premium investors demand to hold 10-year Spanish
government bonds widened to a euro lifetime high of 220 basis
points as investors grew nervous about Spain's credit markets.
 "Equities are turning lower into the open, commodities are
lower and the concern over the European bond market is rising,
so I think all in all we have Canada starting the day off on a
weaker footing," said Camilla Sutton, currency strategist at
Scotia Capital.
 At 8:00 a.m. (1200 GMT), the Canadian dollar CAD=D4  was
at C$1.0282 to the U.S. dollar, or 97.26 U.S. cents, down from
C$1.0251, or 97.55 U.S. cents, at Tuesday's close.
 Sutton said she was eyeing a technical resistance level
around C$1.03. "(It) seems to have held in fairly well and
there's been a lot of congestion around there over the last few
sessions," she said.
 On the support side, she pointed to a recent high of
C$1.0225.
 Investors will also be watching for clues on the Bank of
Canada's July 20 interest rate decision later in the day when
Governor Mark Carney delivers a speech and speaks to media in
Charlottetown.
 Canadian bond prices edged higher across the curve,
tracking U.S. Treasuries which benefitted from modest
safe-haven flows.
 The two-year government bond CA2YT=RR was up 2 Canadian
cents to yield 1.819 percent, while the 10-year bond
CA10YT=RR jumped 20 Canadian cents to yield 3.404 percent.
 (Reporting by Claire Sibonney; Editing by Chizu Nomiyama)