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