CANADA FX DEBT-C$ hits 3-week low on Europe fears, Swiss move

Tue Sep 6, 2011 4:42pm EDT
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* C$ ends at C$0.9898 vs US$, or $1.0103

* Bonds rally across curve, outperform Treasuries

* Bank of Canada interest rate decision at 9 am Wednesday (Updates to close, adds details, commentary)

By Claire Sibonney

TORONTO, Sept 6 (Reuters) - The Canadian dollar eased against the U.S. dollar on Tuesday as renewed euro zone fears and the Swiss central bank's move to curb strength in the franc helped the greenback as an alternative safe-haven currency.

The Swiss National Bank shocked markets by setting a limit on how much its currency can climb against the euro, while risk aversion bubbled up across global markets on worries the European debt crisis is worsening. [FRX/] [MKTS/GLOB]

Nervous investors channeled cash into less risky assets as doubts resurfaced over Italy and Greece's willingness to implement tough budget and debt measures demanded by other euro zone members, while Germany hardened its stand against giving them more aid. [nL5E7K61RE].

"Europe is by no means resolved ... we are going to go through waves of turbulence," said Derek Burleton, deputy chief economist at Toronto-Dominion Bank. "It's going to create a very volatile Canadian-dollar environment."

Following disastrous U.S. employment data last Friday, traders are also looking to the Bank of Canada's policy announcement on Wednesday at 9 a.m. (1300 GMT), and Canadian jobs data at the end of the week. [ID:nN1E78119P] [ID:nN1E780102]   Continued...