CANADA FX DEBT-C$ hits 6-week low on U.S., Europe worries

Mon Nov 21, 2011 8:28am EST
 
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   * C$ hits low of C$1.0369 vs US$, or 96.44 U.S. cents
 *Weakest level since Oct. 10
 * Bond prices rise across curve
 By Claire Sibonney
 TORONTO, Nov 21 (Reuters) - The Canadian dollar hit a
six-week low against the U.S. dollar on Monday as fears about
government debt and deficits on both sides of the Atlantic
prompted another global selloff in riskier assets.
 Taking some of the attention off Europe where investors
sought growing yield premiums to hold Italian and Spanish
bonds, in the United States a congressional "super committee"
failed to agree on deficit-cutting measures. [MKTS/GLOB]
 Republican and Democratic leaders are set to declare defeat
after three months of talks broke down on deep divides over
taxes and spending, which means putting U.S. finances on a
stable path will likely have to wait until 2013 at the
earliest. [ID:nN1E7AK00C]
  "It's really hard to generate a lot of enthusiasm for the
U.S. dollar, so people seem to be holding their nose and buying
it at the present time or holding their nose and buying
everything else," said David Watt, senior currency strategist
at RBC Capital Markets, noting the greenback would be doing
better if it wasn't for the U.S. super committee issues.
 "You have Canada's largest trading partner throwing an
anchor off the back of the economy starting in January. So that
growth dynamic - which has been favorable for Canada from the
perspective that U.S. numbers have been holding up better than
elsewhere - is an open question today."
   At 8:15 a.m. (1315 GMT), the Canadian dollar  CAD=D4
stood at C$1.0354 against the U.S. dollar, or 96.58 U.S. cents,
down from Friday's North American session close at C$1.0272, or
97.35 U.S. cents. Earlier, it hit a low of C$1.0369, 96.44 U.S.
cents, its weakest level since Oct. 10.
 Canadian government bond prices rose alongside U.S.
Treasuries on safe-haven demand. [US/]
 The two-year bond CA2YT=RR added 6 Canadian cents to
yield 0.880 percent, while the 10-year bond CA10YT=RR gained
35 Canadian cents to yield 2.091 percent.
 (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)