CANADA FX DEBT-C$ rebounds from 3-mth low, helped by oil

Mon Jun 27, 2011 2:05pm EDT
 
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 * C$ recovers to C$0.9883, or $1.0118
 * Currency recovers slightly as oil pares some losses
 * Bond prices mostly weaker, long end soft
 By Trish Nixon
 TORONTO, June 27 (Reuters) - Canada's dollar pared losses
after hitting its weakest level in three months on Monday,
helped by a recovery in oil prices, though an upcoming vote
aimed to prevent a Greek debt default weighed on sentiment.
 Greek lawmakers will begin debating a 28 billion euro ($40
billion) package of measures to increase taxes and cut fiscal
spending that is critical to winning a new round of
international funding to keep it afloat. [ID:nLDE75P0BM]
 "Overnight we saw that test of the 200-day moving average,
just above the C$0.9911 marker, and I do think that Canada has
now found some pretty good offers," said C.J. Gavsie, managing
director of foreign exchange sales at BMO Capital Markets.
 "With (oil) bouncing back after cracking that $90 barrier
it definitely showed that Canada should hold its recent ranges
... if oil continues to track south we definitely are going to
be moving (weaker)."
 Oil prices seesawed in choppy trading on Monday, bouncing
off recent lows, as Greek and European leaders worked to
fashion a solution to Athens' debt woes. U.S. August crude
CLQ1 was still down 68 cents to $90.48 a barrel. [O/R]
 Oil is a major Canadian export and movements in its price
often drive movements in the currency.
 The Canadian dollar earlier on Monday slid to $0.9914 to
the U.S. dollar, or $1.0087, its weakest level since March 17.
 At 2:00 p.m. (1600 GMT) the currency CAD=D4 stood at
C$0.9883 to the U.S. dollar, or $1.0118. This compared with
Friday's North American finish at C$0.9870 to the U.S. dollar,
or $1.0132.
 Canadian bond prices were mostly lower, mirroring losses in
U.S. Treasuries, which were hurt by some easing in concerns
about the risk of a Greek debt default. [US/]
 The two-year Canadian government bond CA2YT=RR fell 1
Canadian cent to yield 1.391 percent. The 30-year bond
CA10YT=RR fell 75 Canadian cents to yield 3.403 percent.
 Canadian bond mostly outperformed their U.S. counterparts,
with the difference in yield between the 30-year benchmarks
widening to 85.4 basis points from 82.3 on Friday.
 (Editing by Jeffrey Hodgson)