CANADA FX-DEBT-C$ succumbs to rising US$ after govt yen move

Thu Aug 4, 2011 7:45am EDT
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 * C$ at C$0.9725 vs US$, or $1.0283
 * Bonds prices mostly higher across curve
 By Claire Sibonney
 TORONTO, Aug 4 (Reuters) - The Canadian dollar hit a more
than three-week low against the greenback on Thursday after the
government of Japan's intervention to stem the rise in the yen
boosted the U.S. dollar across the board.
 The yen sold off sharply after Japan intervened to stem the
currency's strength to support its export-led economy, a day
after Switzerland's central bank unexpectedly cut interest
rates to cap a soaring Swiss franc -- the other safe-haven
currency bought during the latest bout of financial stress.
 "What we seen so far is basically like most of the majors,
dollar/Canada is caught in the cross-fire of dollar/yen
intervention," said Adam Cole, head of global FX strategy at
RBC Capital Markets in London.
 "We've seen what appears to be very, very large-scale
buying of dollar/yen by the Bank of Japan overnight and that
has just spilled over generally into dollar strength across the
board and that's carried dollar/Canada higher with it."
 At 7:31 a.m. (1131 GMT), the Canadian dollar CAD=D4 stood
at C$0.9725 versus the U.S. dollar, or $1.0283, down from
Wednesday's North American session close at $0.9626 to the U.S.
dollar, or $1.0389. Earlier, it fell as low as C$0.9747, its
weakest level since July 12.
 Cole pointed to near-term Canadian dollar support at around
C$0.98, near levels last seen at the end of June.
 Later in the morning, focus will turn to any interest rate
decision by the European Central Bank, as well as U.S. weekly
jobless claims data ahead of Friday's crucial non-farm payrolls
 Canadian government bond prices were mostly higher on the
broad flight-to-safety mood, outperforming U.S. Treasuries
across most of the curve, as lower-rated euro zone governments
bonds stabilized on hopes the European Central Bank will resume
its bond purchase program. [US/]
 The two-year Canadian government bond CA2YT=RR was up 4
Canadian cents to yield 1.236 percent, while the 10-year bond
CA10YT=RR added 28 Canadian cents to yield 2.635 percent.
  (Reporting by Claire Sibonney; editing by Jeffrey Benkoe)