CANADA FX DEBT-C$ weakens from 2-mth high on Bernanke comments

Thu Jul 14, 2011 5:08pm EDT
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 * C$ at C$0.9610 to the U.S. dlr, or $1.0406
 * Pulls back from session high of C$0.9549 after Fed news
 * Bernanke says not ready to offer more easing yet
 * Lower oil, commodity prices weigh
 By Trish Nixon
 TORONTO, July 14 (Reuters) - Canada's dollar weakened
against the greenback on Thursday after earlier hitting a
2-month high, as the head of the U.S. Federal Reserve dampened
hopes of that he would offer additional monetary stimulus.
 Fed Chairman Ben Bernanke reiterated that the U.S. central
bank would be ready to inject more money into the system should
the U.S. economy worsen, but stressed that inflation was higher
now than it was late last year, so the Fed was not ready yet to
take action.
 The U.S. dollar also gained against the euro and rallied
from record lows versus the Swiss franc on the central banker's
comments. [FRX/]
 "(The Canadian dollar) is trading up from the (C$0.9580s)
purely on the back of strong dollar in general," said David
Bradley, director of foreign exchange trading at Scotia
 The currency CAD=D4 ended the day at C$0.9605 to the U.S.
dollar, or $1.0406, down from Wednesday's North American finish
at C$0.9597, or $1.0420.
 Early in the session it reached a high of C$0.9549, or
$1.0472, its strongest level since May 11.
 Bradley said because the Canadian dollar fell back from the
two-month high it was more likely to weaken over the next 24
hours. But he saw support at the C$0.9640 and C$0.9650 levels.
 Weaker commodity prices were another drag on the Canadian
dollar. Canada is a major natural resources exporter, and
movements in their prices often influence the currency's
 Oil prices fell for their first time in three days. [O/R]
 Canadian bond prices were mostly lower. The five-year bond
CA5YT=RR fell 2.2 cents to yield 2.221 percent, while the
30-year bond CA30YT=RR was off 47 cents, yielding 3.403
 Canadian bonds mostly outperformed U.S. Treasuries, with
the Canadian 10-year yield 0.5 basis points below its U.S.
counterpart, compared with 7.2 basis points above yesterday.
 Some traders said given problems in Europe and the United
States, Canada looked increasingly appealing to international
 The United States may lose its top-notch credit rating in
the next few weeks if lawmakers fail to increase the country's
legal borrowing limit and the government misses debt payments,
Moody's Investors Service warned on Wednesday.
 (Editing by Jeffrey Hodgson)