CANADA FX DEBT-C$ drops to near 7-week low on soft commodities

Mon May 16, 2011 8:23am EDT
 
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 * C$ slides to C$0.9749 to the U.S. dollar, or $1.0257
 * Tracks weakening euro, oil and stock markets
 * Bond prices edge up
 By Ka Yan Ng
 TORONTO, May 16 (Reuters) - The Canadian dollar neared a
seven-week low against the U.S. currency on Monday, while bond
prices edged higher across the curve, as risk sentiment was
stung over euro zone debt restructuring and on doubts about the
pace of global growth.
 Canada's currency, like its sister commodity-linked
Australian and New Zealand dollars, was caught up in the global
exit from equity and commodity markets.
 Oil dropped more than $1 per barrel, while silver and other
commodities fell as well. [O/R][IMET/L]
 "It's been a continuation of what we've seen over the past
few weeks. There's a lot of pessimistic views out there. We see
that in commodity prices that are continuing to decline and
stock markets in Asia and Europe have been on the downside
today," said Charles St-Arnaud, Canadian economist and currency
strategist at Nomura Securities International in New York.
 "All that is putting pressure on the Canadian dollar."
 The euro, a recent barometer of risk appetite, also traded
near a seven-week low against the greenback on Monday as
investors sought clarity over how fresh talks on further aid
for struggling euro zone states might pan out. [ID:nLDE74F0Y8]
 It skidded to lowest levels since late March in Asian trade
as news that IMF chief Dominique Strauss-Kahn had been accused
of attempted rape added to the uncertainty. [FRX/]
 Domestically, attention will shift to Mark Carney, the
Governor of the Bank of Canada, later in the session when he
presents a speech entitled "Canada in a Multi-Polar World" at 1
p.m., with a press conference to follow.
 The speech will come less than two weeks before the central
bank next sets monetary policy. The bank lifted borrowing costs
three times last year to 1.0 percent but has sat on the
sidelines since September.
 Most market players believe a May 31 rate hike is off the
table for the Bank of Canada. According to a Reuters
calculation of overnight index swaps, markets have fully priced
in a quarter-point increase by Oct. 25. BOCWATCH
 Before the central bank chief's speech, markets will digest
domestic March manufacturing data at 8:30 a.m. Market operators
expect a 1.6 percent increase in factory sales,  reversing
February's 1.5 percent slide. ECONCA .
 At 8 a.m. (1200 GMT), the Canadian dollar CAD=D4 was at
C$0.9749 to the U.S. dollar, or $1.0257, down from Friday's
North American session close at C$0.9687 to the U.S. dollar, or
$1.0323.
 Canada's two-year bond CA2YT=RR was up 4 Canadian cents
to yield 1.671 percent, while the 10-year bond CA10YT=RR
gained 18 Canadian cents to yield 3.174 percent.
 (Reporting by Ka Yan Ng; Editing by Kenneth Barry)