CANADA FX DEBT-C$ ends weaker as commodity prices slip

Thu Nov 19, 2009 4:43pm EST
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 * C$ ends at C$1.0635 to the US$
 * Canadian data shows signs of growth
 * Bond prices higher across the curve
 (Recasts to close)
 By Frank Pingue
 TORONTO, Nov 19 (Reuters) - Canada's dollar skidded on
Thursday to its weakest against the U.S. currency in more than
a week and ended down for a third straight session as key
commodity prices slipped and investors curbed their appetite
for risk.
 Pullback in the Canadian dollar came alongside a slide in
oil prices on concerns about energy demand, and a drop in gold
prices from a record high hit on Wednesday. [O/R] [GOL/]. Oil
and gold are two of Canada's main exports.
 "Generally when we've seen this move back to risk aversion
it hasn't lasted long, just a session or two," said Camilla
Sutton, currency strategist at Scotia Capital. "It could very
well carry into tomorrow but I suspect it's really a temporary
correction in the broader trend."
 The Canadian dollar ended the session at C$1.0635 to the
U.S. dollar, or 94.03 U.S. cents, down from C$1.0545 to the
U.S. dollar, or 94.83 U.S. cents, at Wednesday's close.
 Earlier it slipped to C$1.0690 to the U.S. dollar, or 93.55
U.S. cents, its lowest since Nov. 9.
 Investors pulled back on some of their riskier investments
after Brazil's latest attempt to curb foreign inflows into its
soaring currency fanned fears that some Asian nations may slap
controls on capital flows. [ID:nN18128104]
 Also weighing on the Canadian dollar was nagging
uncertainty over the global economy's future and a move by some
traders to lock in gains on the still relatively strong
currency before year end.
 Sutton said the Canadian dollar stands to build on this
year's torrid climb until global central banks stop their
rhetoric of supporting economic growth at almost any cost.
 Canada's currency is about 23 percent stronger than a
four-year low touched in March, a gain that some experts insist
opens the door to sudden bouts of selling whenever a hint of
gloomy news arises.
 Canadian bond prices ended up across the curve as the slide
in North American equities triggered buying interest in more
secure assets like government debt.
 The rally in bond prices followed U.S. data that showed the
number of workers filing new applications for jobless insurance
was unchanged last week, but the four-week moving average of
claims dropped to its lowest in almost a year. [ID:nN18123033]
 The S&P/TSX composite index .GSPTSE slipped 0.45 percent,
while the Dow Jones industrial average fell 0.9 percent.
 The two-year Canada bond rose 9 Canadian cents to C$99.97
to yield 1.268 percent, while the 10-year bond rose 27 Canadian
cents to C$102.93 to yield 3.387 percent.
 Canadian bonds outperformed U.S. Treasuries across much of
the curve. The Canadian 10-year yield was 4.5 basis points
above its U.S. counterpart, compared with 5.2 basis points on
 (Editing by Frank McGurty)