CANADA FX DEBT-C$ extends fall, hits two-week low

Fri Dec 17, 2010 12:37pm EST
 
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 * C$ slides to 98.63 U.S. cents
 * Canadian bond prices flat to higher
 (Updates to midday)
 TORONTO, Dec 17 (Reuters) - The Canadian dollar fell
further against the U.S. currency on Friday to hit a two-week
low as investors shifted their focus to the troubles in the
euro zone, which spurred a flight to safety to the U.S.
dollar.
 Canada's currency fell as low as C$1.0147 to the U.S.
dollar, or 98.55 U.S. cents, its lowest point since Dec. 2, as
the euro came under pressure after Moody's Investors Service
slashed Ireland's credit rating by five notches.
 The credit rating agency also warned that further
downgrades could follow if Ireland is unable to stabilize its
debt situation.
 "It's been more of a volatile day than has typically been
the case recently, but a lot of that has been a couple of brief
spikes and the bias around the intraday trading has been pretty
restrained," said Sacha Tihanyi, currency strategist at Scotia
Capital.
 "It's essentially a U.S. dollar strength kind of day. It
seems like the positive news about the euro has worn off fairly
quickly."
 At 12:15 p.m. (1715 GMT), the Canadian dollar CAD=D4 was
at C$1.0139 to the U.S. dollar, or 98.63 U.S. cents, down
sharply from its Thursday's finish of C$1.0059 to the U.S.
dollar, or 99.41 U.S. cents.
 Canadian bonds were flat to higher across the curve, partly
tracking prices of U.S. Treasuries, which climbed in part as
the Irish credit rating downgrade supported flow to safe-haven
debt. [US/]
 Weakening stock markets also helped the less risky
government bond market attract investors.
 The interest-rate sensitive two-year bond CA2YT=RR edged
6 Canadian cents higher to yield 1.647 percent, while the
10-year bond CA10YT=RR climbed 33 Canadian cents to yield
3.216 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)