CANADA FX DEBT-C$ drops, bonds rise as markets seek safety

Mon Aug 17, 2009 10:30am EDT
 
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 * Canadian dollar slips to C$1.1102, or 90.07 U.S. cents
 * Bonds extend safe-haven gains
 TORONTO, Aug 17 (Reuters) - The Canadian dollar fell to a
one-month low versus the greenback on Monday as doubts about
the pace of global economic recovery pushed the market to seek
safety in the U.S. dollar.
 Overnight, the Canadian currency slipped to a one-month low
at C$1.1126 to the U.S. dollar, or 89.88 U.S. cents, on the
back of tumbling stock markets and hard-hit commodity prices,
two factors that often influence the movement of the Canadian
dollar.
 Risk demand was stung as Chinese stocks extended losses and
other stock markets followed suit, including the North American
markets at Monday's open.
 The price of oil slipped to its lowest point this month at
below $66 a barrel as investors became more cautious about the
pace of global economic recovery and any subsequent revival in
energy demand. [ID:nSYD485910]
 "With risk aversion levels moving higher, basically the
U.S. dollar strengthened across the board," said George Davis,
chief technical strategist at RBC Capital Markets, adding that
the move to the C$1.11 area looked "a little overdone".
 "If we continue to see short-covering here, we will see the
Canadian dollar get marginally stronger. But I don't think it's
going to be enough to offset what we've seen overnight."
 At 10:05 a.m. (1405 GMT), the Canadian dollar was at
C$1.1102 to the U.S. dollar, or 90.07 U.S. cents, down from
C$1.0998 to the U.S. dollar, or 90.93 U.S. cents, at Friday's
close.
 BONDS HEAD HIGHER
 Canadian bond prices were higher across the curve,
extending safe-haven gains as stock markets fell and uneasiness
about the strength of the recovery grew.
 The rise built on gains made on Friday after a drop in U.S.
consumer confidence data persuaded investors to exit equities
and seek the safety of government bonds.
 The two-year Canadian bond climbed 6 Canadian cents to
C$99.42 to yield 1.292 percent, while the 10-year bond rose 38
Canadian cents to C$102.63 to yield 3.431 percent.
 The 30-year bond rose 60 Canadian cents to C$118.25 to
yield 3.916 percent. In the United States, the 30-year bond
yielded 4.372 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)