4 Min Read
* C$ at C$1.0242 vs US$, or 97.67 U.S. cents
* Bond prices rise as equities slump
By John McCrank
TORONTO, Oct 12 (Reuters) - The Canadian dollar weakened against the U.S. dollar on Thursday morning as commodity prices softened after recent rallies and trade data from China pointed to softening global growth.
In the week leading up to Wednesday's close, the Canadian dollar gained more than 3 percent against the greenback as euro zone leaders made progress toward containing the sovereign debt crisis and investors eased back into commodities and other risk-sensitive assets.
"The 'risk on' trade has had a fairly solid few days and probably just needs a little bit of consolidation," said Shane Enright, executive director, foreign exchange sales, at CIBC World Markets. "Maybe the buy interest, for now, has exhausted a bit."
At 10:30 a.m. (1430 GMT), the Canadian dollar CAD=D3 was at C$1.0242 to the U.S. dollar, or 97.67 U.S. cents. That compared with Wednesday's North American close of C$1.0173 to the U.S. dollar, or 98.30 U.S. cents.
The currency touched its highest level versus the greenback since Sept. 22 on Wednesday, hitting C$1.0135, or 98.67 U.S. cents, before pulling back.
U.S. crude prices, which up until Wednesday had risen 13 percent over the previous five sessions, fell 2 percent to $83.84 a barrel, in part due to weaker than forecast trade data out of China, which signaled a slowing global economy. [ID:nL3E7LD191]
The value of China's imports and exports, however, remained near record highs, while most commodity prices are still below levels hit before the European crisis began dominating headlines.
"The Chinese export growth numbers were probably a little bit soft, but the news overnight was actually mixed," Enright said. "Their copper imports and their iron ore shipment numbers were quite solid, suggesting that there's still demand coming on commodities with the recent pullback in prices."
Trade data out of Canada on Thursday came in slightly better than expected, with the trade deficit growing to C$622 million ($610 million) in August as imports grew at a faster rate than exports. Analysts had forecast the deficit would be C$1.0 billion. [ID:nN1E79C09B]
On the radar for investors, G20 finance ministers and central bank governors are meeting in Paris on Thursday and Friday ahead of a G20 summit next month in Cannes, France.
Canadian Prime Minister Stephen Harper called on Europe and the G20 economies to act quickly and decisively to avoid another full-scale global recession. [ID:nN1E79C05D]
"The good news is that this crisis can still be contained and reversed," Harper said in an op-ed piece in the Globe and Mail newspaper on Thursday.
"The bad news is that, unless decisive action is urgently taken, our nations will once again be forced to respond to a full-blown global recession, albeit this time without the full arsenal of policy weapons at our disposal."
Canadian bond prices were higher across the board as stock markets declined on the back of the weak Chinese data, increasing demand for safe-haven government debt.
The two-year Canadian government bond CA2YT=RR rose 16 Canadian cents to yield 0.967 percent, while the 10-year bond CA10YT=RR climbed 37 Canadian cents to yield 2.311 percent. (Reporting by John McCrank; editing by Peter Galloway)