CANADA FX DEBT-Greek fears pull C$ to 3-month low
* C$ at C$0.9866 to the U.S. dollar, or $1.0136
* Drops as low as C$0.9899, or $1.0102
* Bond prices firmer across curve on safe-haven buying
By Solarina Ho
TORONTO, June 16 (Reuters) - The Canadian dollar weakened to its lowest level against the U.S. dollar in three months on Thursday morning as renewed fears that Greece's debt problems were out of control spurred a flight to safety.
The currency -- already pressured by weak Canadian and U.S. economic data and Greek worry on Wednesday -- extended the previous session's losses, falling to its weakest level since March 17 and inching closer to parity with the U.S. dollar.
"Obviously it's been a Canada selloff ... definitely led by what's happening in Europe. That was the catalyst for the markets in the overnight session, leading us to a stronger U.S. dollar across the board," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets.
"(The Canadian dollar) is being caught up in the whole sweep as far as (U.S.) dollar bids."
Better-than-expected U.S. employment and housing figures offered some relief with the Canadian currency trimming earlier losses following the U.S. data. [ID:nN16172420]
New claims for U.S. unemployment benefits fell last week, while housing starts and permits for future construction rose in May, signs that offered some hope the U.S. economy could soon pull out of its soft patch.
Shortly before the data was released at 8:30 a.m. (1230 GMT), the currency fell as low as C$0.9899 to the U.S. dollar, or $1.0102.
"That was a little bit of profit-taking from short-USD/CAD positions ahead of the numbers. Some apprehensiveness again -- it was more taking off of positions rather than establishing new ones," Gavsie said.
At 9:02 a.m., the currency CAD=D4 was at C$0.9866 to the U.S. dollar, or $1.0136, weaker than Wednesday's North American finish of C$0.9790 to the U.S. dollar, or $1.0215. It broke through C$0.9850, which some traders said was a key level that could spawn another round of Canadian dollar weakness.
Overseas, the euro hit a lifetime low against the Swiss franc and a three-week low against the U.S. dollar. [FRX/]
The negative sentiment on Greece was fueled by violent protests in Athens, highlighting the political obstacles to a second debt bailout, with Prime Minister George Papandreou forced to reshuffle his cabinet to salvage his government after resignations by ruling party lawmakers. [nL3E7HG0P8]
Crude prices were slightly weaker in choppy trading, with U.S. crude falling below $95 a barrel. Traders and analyst said the overall trend remained downwards, adding to the commodity-linked Canadian currency's softness. [O/R]
"(Oil's) definitely having an impact here...A move down to $90 a barrel warrants parity or better in terms of USD/CAD," Gavsie said.
He said he expected to see the currency to fall as low as C$0.9920 on Thursday, but also with the potential to firm to C$0.9795.
Canadian bond prices were stronger across the curve as investors rushed back into low-risk assets.
The two-year bond CA2YT=RR rose 14.4 Canadian cents to yield 1.464 percent, while the 10-year bond CA10YT=RR added 11 Canadian cents to yield 2.941 percent.
(Editing by Peter Galloway)
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