July 4, 2011 / 9:03 PM / 6 years ago

CANADA FX DEBT-C$ slips off 8-week high on S&P Greek warning

* C$ ends down at C$0.9608 vs US$, or $1.0408

* Bond prices slightly higher across curve (Updates to close, adds details, quotes)

By Claire Sibonney

TORONTO, July 4 (Reuters) - The Canadian dollar eased from a near eight-week high against the greenback on Monday in quiet holiday trading after Standard & Poor’s warned that a debt rollover plan pushed by French banks could put Greece in danger of default.

Following that reminder that the euro zone’s debt woes are far from over, the Canadian currency tracked weakness in the euro, though expectations for a second Greek bailout kept riskier assets, including equity markets, well bid. [FRX/] [nL3E7I40H3]

“That could have made people scale back a little bit but in a thin market like this, not a lot is going on,” said John Curran, senior vice president at CanadianForex, noting volume was extremely light due to the Independence Day holiday in the United States, and following the Canadian dollar’s big move higher last week.

“If anything, you may see some slight weakness on people just ringing the till on some of the recent positions that they’ve had, we had such a huge move last week.”

On Saturday, euro zone finance ministers approved a 12 billion euro aid installment for Greece and said the details of a second aid package would be finalized by mid-September.

Anticipation of Saturday’s deal helped the Canadian dollar rally more than 3 percent over the past week.

In the last three days, the Canadian dollar has been the biggest gainer of the G10 currencies, said Jack Spitz, managing director of foreign exchange at National Bank Financial.

The currency CAD=D4 closed the North American session at C$0.9608 versus the U.S. dollar, or $1.0408, down from Friday’s close at C$0.9590 to the U.S. dollar, or $1.0428. Early on Monday, it firmed to C$0.9580, or $1.0438, its highest level since May 11.

“The S&P comments (on Greece) seem not to have rattled the loonie’s short-term strength,” said Spitz, pointing to near-term resistance for the Canadian dollar in the C$0.9580 to C$0.9500 area. He sees the closest support for the currency around C$0.9640-50.

Canadian data on Monday that showed slack global demand for industrial metals dampened domestic producer prices in May was of little consequence to the Canadian dollar. [ID:nN1E76306D]

The highlight of this week for the market will be Friday’s closely watched U.S. and Canadian jobs reports for June.

Canadian bond prices were flat to slightly higher, lacking any direction from their U.S. counterparts. The two-year bond CA2YT=RR rose 2 Canadian cents to yield 1.586 percent, while the 10-year bond CA10YT=RR was up 35 Canadian cents to yield 3.085 percent. (Reporting by Claire Sibonney; editing by Peter Galloway)

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