CANADA FX DEBT-C$ falls on soft commodities, China data

Thu Oct 13, 2011 10:53am EDT
 
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   * 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)