CANADA FX DEBT-Canada dollar slides on dim commodities outlook

Mon Nov 17, 2008 10:11am EST
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 * C$ slides 0.4 percent, approaches key technical levels
 * Bonds up on disappointment over outcome of G20 meeting
 By John McCrank
 TORONTO, Nov 17 (Reuters) - Canada's dollar fell against
the U.S. dollar on Monday, as investors worried about the
dimming long-term prospects for the prices of oil and other
commodities that Canada exports.
 Canadian bond prices, with no domestic data to influence
moves, rose on a safe-haven bid after an emergency summit of
leaders from the Group of 20 nations ended with few concrete
 At 9:45 a.m. (1445 GMT), the Canadian dollar was at
C$1.2308 to the U.S. dollar, or 81.25 U.S. cents, down from
C$1.2255 to the U.S. dollar, or 81.60 U.S. cents, at Friday's
 Crude oil prices moved from negative to positive on Monday,
but more important than the short-term moves were the long-term
prospects for demand, which have dwindled along with global
growth, said David Watt, senior currency strategist at RBC
Capital Markets.
 "I'm almost prepared at present to dismiss rallies in the
Canadian dollar until I get clear evidence that the global
financial backdrop and the global economic backdrop are
starting to improve and that just doesn't seem to be
happening," he said.
 Canada is a major exporter of many key commodities and is
the biggest supplier of oil to the United States.
 Watt also said that the Canadian dollar is getting close to
technical levels, at around C$1.2436 to the U.S. dollar, that
could trigger automatic trades and send it sharply lower versus
its U.S. counterpart.
 The currency hit a weakpoint of C$1.2426 to the greenback,
in the overnight session.
 Canadian bond prices rallied along side the larger U.S.
market, but unwound some as investors contemplated the results
of the G20 summit in Washington over the weekend.
 "People came out of the G20 meeting a little bit
disappointed, or at least unexcited by the developments," said
Eric Lascelles, chief economics and rates strategist at TD
 There was no announcement of any coordinated plans on
central bank rates or fiscal policy at the emergency summit,
though there was an emphasis that some of that could be
necessary sometime in the future.
 "A little bit of a mixed message there, but ultimately that
slight amount of disappointment contributing to the rally in
the bond market," said Lascelles.
The Canadian overnight Libor rate LIBOR01was 2.5000
percent, up from 2.4667 percent on Friday.
 Friday's CORRA rate CORRA= was 2.2425 percent, down
slightly from 2.2460 percent on Thursday. The Bank of Canada
publishes the previous day's rate at around 9 a.m. daily.
 The two-year bond gained 1 Canadian cent to C$101.69 to
yield 1.901 percent. The 10-year bond climbed 27 Canadian cents
to C$105.17 to yield 3.603 percent.
 The yield spread between the two- and 10-year bond was 181
basis points, up from 180 at the previous close.
 The 30-year bond added 35 Canadian cents to C$113.15 to
yield 4.204 percent. In the United States, the 30-year Treasury
yielded 4.211 percent.