CANADA FX DEBT-C$ tumbles, bonds rise on Greek anxiety

Fri Jun 24, 2011 2:27pm EDT
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 * C$ slides to lowest since June 16
 * C$ at C$0.9855 to the U.S. dollar, or $1.0147
 * Bond price rally fueled by safety bid
 (Adds details)
 TORONTO, June 24 (Reuters) - The Canadian dollar slid to
its lowest point in more than a week against its U.S.
counterpart on Friday, extending losses that started at
mid-week on mounting concerns about euro zone woes.
 Government bond prices rallied in a flight to safety ahead
of the weekend.
 Investors continued to worry that Greece's parliament may
not pass the austerity measures needed for the country to
secure more bailout funds.
 In addition, the currency was hit for a second day by
falling oil prices after consuming nations announced they were
tapping strategic oil reserves to boost the economy. Canada is
a major oil exporter.
 Not even a brighter outlook for the U.S. economy could slow
down the flight to safety. U.S. first-quarter economic growth
was revised modestly higher on Friday and U.S. durable goods
orders in May were also higher.
 "We're clearly concerned about the ongoing issues in Europe
and Greece and the market pessimism and the momentum in the
market is so pronounced that even good news, like durable goods
orders today, are completely ignored," said David Tulk, chief
Canada macro strategist at TD Securities.
 "Instead we're waiting for this wave of uncertainty (to
subside) because there is this overriding belief that more can
go wrong than can go right."
 At 1:45 p.m. (1745 GMT), the currency CAD=D4 was at
C$0.9855 to the U.S. dollar, or $1.0147, down from Thursday's
North American finish of $0.9780 to the U.S. dollar, or
$1.0225. Earlier, it fell as low as C$0.9879, or $1.0122
earlier, its lowest level since June 16.
 The two-year bond CA2YT=RR jumped 12 Canadian cents to
yield 1.387 percent, while the 10-year bond CA10YT=RR
advanced 27 Canadian cents to yield 2.871 percent.
Of key concern to the global outlook is the health of the
global factory sector, said David Watt, senior currency
strategist at RBC Capital Markets, noting that the most recent
string of data was far from encouraging.
 A slew of purchasing manager indexes from around the world,
including Canada, in coming weeks will offer a better read on
how the world's factory sector is performing.
 "Right now the signs are not all that encouraging. If
you're a cyclical commodity-sensitive currency it's not the
best situation and that's pretty much what Canada is," said
 (Reporting by Ka Yan Ng and Solarina Ho; editing by Peter